Global mid- to high-sulfur petcoke prices slide to multi-year low

Prices of mid- to high-sulfur petcoke on a delivered basis to major consumers in the Mediterranean, Middle East and North Africa, and Asia-Pacific region slumped to a multi-year low during the August-September period due to news surrounding China's ban on high-sulfur petcoke and muted demand from end-users.

Prices of petcoke delivered to the Mediterranean, Middle East and North Africa region along with India fell to a near four-year low. Platts, part of S&P Global Commodity Insights, last assessed CIF Turkey US origin petcoke with 5.5% sulfur content at $85/mt on Sept. 25. The previous low for CIF Turkey 5.5% sulfur US-delivered petcoke was $83/mt on Oct. 14, 2020. Meanwhile, CFR India US origin petcoke with 6.5% sulfur content was assessed at $99/mt on Sept. 25. The CFR India price last fell below $100/mt on Dec. 16, 2020, when it stood at $96/mt.

"Prices have been steadily declining each week since August as buyers look for smaller quantities of petcoke and place lower bids, forcing sellers to lower their offer levels," a UAE-based trader said. Sellers have had to reduce their offers in an effort to move their surplus spot cargoes.

China's high-sulfur ban bodes well for Indian, Turkish buyers

Earlier in the year, reports emerged that the Chinese government was mulling to ban high-sulfur petcoke in a bid to curb pollution and meet the country's decarbonization goals, which sent ripples in the market as China along with India and Turkey are major consumers of mid- to high-sulfur petcoke, market participants said.

Although there has been no official decree or announcement on the ban, buyers in China have already shifted their focus to low-sulfur petcoke, which typically carries a high premium over the mid-to high-sulfur petcoke, market participants said.

In August-September, China only imported 700,000 mt of petcoke, down from 1.1 million mt in the previous two-month period and 100,000 mt lower from a year ago, according to S&P Global Commodities at Sea data.

With China no longer in the market for mid- to high-sulfur petcoke, the market was oversupplied as major refiners in the US and Saudi Arabia had to adjust to new dynamics in the market in the absence of a key consumer, market participants said. This left buyers in India and Turkey with a greater say on pricing for mid- to high-sulfur petcoke at a time when most cement producers in both countries had sufficient stockpiles.

Saudi-origin petcoke, containing up to 9.5% sulfur, became increasingly reliant on the Indian market for sales. The prices of Saudi petcoke also declined as buyers showed little urgency to purchase cargoes, and there was no premium associated with shorter voyages, an India-based producer said. A few states in India restrict the use of petcoke with sulfur content exceeding 7%, so the market for Saudi petcoke further narrowed, contributing to further price declines, the producer said.

Even during periods of low demand, the supply of petcoke continues, an India-based trader said. Besides, refiners can't keep this product for long and must offload it, which increases supply in the market, an India-based buyer said.

The existing stocks could only be consumed partially during the April-June quarter owing to slow construction activity amid the general elections in the country. The following quarter was further impacted by the monsoon, which impeded construction and dampened demand further. As a result, inventories accumulated at ports and plants, resulting in cement facilities operating at nearly half of their optimal capacity.

The cement industry proceeded cautiously due to sluggish construction activity, leading to minimal petcoke purchases during this period. Monthly purchases were postponed, accumulating unsold inventories, further stifling demand and adding downward pressure on prices. As a result, market participants believe buyers have enough stocks until November.

In the August-September period, India imported a total of 1.7 million mt of petcoke, a drop from 2 million mt during the same period in 2023, according to CAS data.

Meanwhile, Turkey's petcoke imports increased to 800,000 mt of petcoke in the August-September period from 300,000 mt in the previous two-month and year-ago period, according to CAS data. Market participants highlighted that that the uptick in Turkey's petcoke imports was driven by falling prices of delivered petcoke and the rise of Russian high-calorific thermal coal prices, which serves as an alternative fuel for cement producers in Turkey.

According to Platts assessment, the average price of CIF Turkey for US-origin petcoke with 5.5% sulfur content during the August-September period was $89.69/mt, down from $91.50/mt in the previous two-month period and $129.35/mt in the corresponding period of 2023. In contrast, the average price of CIF Med 45,000 mt 6,000 kcal/kg NAR was $101.75/mt in August-September, sharply up from $92.20/mt in June-July but down from $107.65/mt in the previous year.