India re-emerges as largest petcoke importer amid China's real estate downturn

India retained its top spot as the largest petcoke importer, driven by robust economic growth in 2023, while China, which was at the helm in 2021 and 2022, saw its imports decline as the country's real estate industry continued to go through a slow down.

While India's imports remain on an upward trajectory as a result of the country's economic growth since it lifted COVID-19 restrictions towards the end of 2021, China's economy has been slow coming out of the woods due to the extended zero-COVID policy that resulted in a slower-than-expected growth rate.

India's petcoke imports increased 10.7% from a year ago to 12 million mt in 2023, while China's imports slumped 17% year on year to 9.4 million mt, according to S&P Global Commodities at Sea.

In 2024, the trajectory will likely be replicated as Indian demand is expected to increase whereas a downturn in China's demand may continue to reflect a lower volume of imported petcoke.

Despite the opposite growth story, the neighboring countries made up the lion's share of global petcoke imports as they cumulatively imported 21.4 million mt of petcoke out of a total 52.3 million mt that was carried through seaborne trade in 2023, according to CAS.

India's growth story

India's petcoke consumption witnessed a year-on-year increase in the past two financial years and is in line to see an uptick in the financial year 2023-24 (April-March). In the financial year 2022-23 it increased by 22% and during April-November of the current financial year it rose 6% compared with the same year-ago period in FY2023, according to data by India's Petroleum Planning and Analysis Cell.

During 2023, Indian petcoke buyers showed a strong appetite to replenish stockpiles despite the volatility in prices.

The Platts-assessed CFR India 6.5% sulfur content petcoke of US origin averaged $134.95/mt in 2023, S&P Global Commodity Insights data showed. The prices were elevated at the beginning of the year but slumped to low-$100/mt amid muted demand before slowly crawling back to mid-$130/mt as a result of robust demand post-monsoon season.

The buying momentum in 2023, which did come to a halt towards the last few months of the year, is likely to find some support in the first three months of 2024 although it has been a slow start, market participants said.

According to a trader based in India, demand for petcoke in India is likely to touch 24 million mt in 2024, of which 13 million mt to 14 million mt will likely be met by domestic refiners, while the rest will likely be imported.

"There will be requirements in Q4 (fourth quarter of FY2024)," an India-based buyer said.

China's real-estate slowdown

Despite the government's push to boost consumer sentiment, investment in China's real estate fell over February-November 2023, while the number of real estate projects that started during the period slumped.

According to data by China's National Bureau of Statistics, total investment planned for real estate in February-November 2023 slipped 0.8% year on year to Yuan 9.596 trillion, whereas the real estate floor space declined 32.7% year on year to 453,216.47 (10,000 sq m).

The country's cement industry, which has been undergoing a downturn having peaked in 2020, is expected to be subdued for some time although there was growth in the first half of 2023, the International Energy Agency said in its latest report.

"The real estate sector in China is contracting, and this is set to weigh on cement production," the EIA said. "This applies not only to 2023 as this trend appears to be structural in nature and not resolvable in the short term," the IEA added.

With the country's economy expected to be sluggish in 2024, petcoke demand is expected to continue on a downtrend.

"The forecasts suggest that China's economy isn't going to see the turnaround many were hoping for and it will reflect in construction activities in the country as well," an India-based trader dealing with the Chinese market said.

While China-based buyers procure petcoke supply mainly from the US, Saudi Arabia, Venezuela, Brazil and Argentina, market participants said more material may arrive from Venezuela and Saudi Arabia this year.

"China could see more petcoke coming in from Saudi Arabia's refiners in 2024 as Saudi Arabian suppliers prefer dealing with the Chinese market compared with Indian buyers," another India-based trader dealing with the Chinese market said.

Venezuelan petcoke supply on the other hand, which saw an uptick towards the last few months of 2023, may have more availabilities for the market as petcoke is no longer restricted under US sanctions.