US calcined petcoke prices hold as aluminum buyers and suppliers butt heads
The Platts US calcined petcoke price assessment held flat for a second month, with bids and offers in a wider range, as buyers and sellers saw prices moving in opposite directions.
The Platts monthly assessment was unchanged at $275-$290/mt FOB US Gulf in July, reflecting the transactable, repeatable value of CPC with less than 3% sulfur , 300-400 ppm vanadium and typical metals, loading 30-60 days forward.
July was a less active month for CPC negotiations, as many aluminum smelter buyers had just settled pricing on second-quarter contracts in June. The month saw some initial discussions over Q3 pricing in the Gulf and H2 pricing from the US West Coast , as well as a couple of spot deals or offers.
A buyer reported booking a typical-spec cargo at $280 FOB US Gulf for Q3 delivery. A calciner reported an early Q3 settlement in the "upper $200s” FOB Gulf and said he would not sell lower than $280.
Another calciner provided more detail on a late June booking at $295, which was a spot deal for CPC with 3.5% S and 350 ppm V. His impression was that some aluminum smelter restarts were happening more quickly than expected, and he thought US CPC supply and demand were moving closer to balance.
Traders and calciners said that Brazil 's Albras and the Magnitude 7 smelter in Missouri have taken more CPC sooner than expected, and Aluminium Bahrain is also ramping up. Century, however, has publicly stated that its Hawesville, Kentucky , restart has been offset by taking a line down for maintenance.
Calciners and traders pointed to 40,000 mt of CPC demand which would eventually come from the Aluminium de Becancour smelter in Quebec , after it works through its inventory of anodes and CPC, while the US would see 100,000 mt of additional CPC demand by next year when Century's ramp-up is completed along with the Magnitude 7 and Alcoa restarts.
"We will still be an exporting nation out of US next year, but it will be much more balanced,” the second calciner said.
"During the next six months, we will have 1 million mt of metal coming on which will need 400,000 mt of CPC,” the first calciner noted. "So I think that is the reason sentiment will change, because that will … balance the market to provide some momentum for things to start changing, or at a minimum to stop the [declining] trends we've seen.”
In addition, "The margins on smelting have moved in the right direction due to the alumina price decline,” the second calciner said. "The smelting guys aren't grinning from ear to ear, but they are looking less suicidal than they were at the beginning of the year.”
In stark contrast, aluminum buyers pointed to languishing aluminum prices, weaker aluminum demand, further decreases in green petcoke prices and excess CPC supply as factors supporting further CPC price drops.
"The metal price is still very bad; it's low. So on that basis I don't see any reason why this market should move up again,” a second smelter buyer said. "China is also continuing to be sluggish.”
As to smelter margins, while lower alumina prices might keep aluminum production on stream longer than it should be, that doesn't mean that savings should be "handed over to calciners,” he said. His company saw Gulf prices at $270-$280 or lower.
BOTH SIDES STRUGGLING
Calciners, traders and smelters in equal parts talked about "bleeding” at current price levels.
Another buyer who paid around $280 FOB US Gulf for Q2 said he saw Q3 levels at between $260 and $280, with calciners claiming "at $270 they are bleeding hard.” He thought the lack of calls with offers so far meant prices were falling.
"Looking at the length in the market and the fact that green coke prices are still falling, $260 [FOB Gulf] is not a crazy number,” said a buyer with a company that booked Q2 business at around $280 FOB US Gulf but had not yet settled Q3 pricing. The company was later heard to be considering an offer at $270.
Another smelter official heard prices in the $280s FOB US Gulf but decided not to source from the Gulf, and a market observer thought smelters were targeting $260-$265.
US West Coast CPC pricing was also not settled for either Q3 or H2, but one of the buyers said a "step change” down was needed from the H1 level of the high $330s FOB. Some buyers were targeting $270-$280 FOB, while buyers who paid in the low $300s CFR to the EMEA region thought prices should come down from there.
EUROPEAN PRICES STILL FALLING
Europe has seen imports of both US quality CPC and South American low-sulfur CPC competing with the typical European grades. European Q3 offers were reported around $305-$325 CFR Rotterdam basis, with some concluded in that range, but some smelters were targeting below $300.
One refiner source cited $300 as a "red line” not to be crossed, and a smelter buyer agreed suppliers were not yet ready to accept that.
Chinese CPC prices stopped falling this month but still present an arbitrage opportunity in Europe . One aluminum buyer said he had seen "lots of approaches from Chinese sellers,” with the last offer at $290 CFR Europe .
Another smelter buyer was finalizing a cargo in the mid $270s FOB China loading in mid-August, and saw Chinese prices down about $10 from last month. A third aluminum company was heard to have paid in the low $270s FOB China for September delivery.
An Indian smelter was reported to have bought earlier in July at around $270 FOB China for August delivery, for a less than 3% S grade.
Supplier sources, however, thought Chinese CPC prices had rebounded from their lows, and one noted that Indian buyers were "sniffing around the US Gulf, which tells us the Gulf has gone a little too cheap.”
Middle Eastern offer levels were reported at around $290 CFR for Chinese or up to the mid $300s for local supply, but some off-spec local CPC with 3.7% S and low VBD was heard to have sold to China at well below $200 CFR
South American low-sulfur CPC was heard offered at $285 FOB.
GREEN COKE PRICES STEADY TO DOWN
Low-sulfur green coke prices were still seen falling, while other GPC grades were stable to down only 5%.
GPC from Argentina 's YPF has become a market barometer with spot sales occurring every few weeks. Sources cited a tender awarded this week at around $170/mt CFR India which would net back to the low $90s FOB. A late June/early July tender settled in the $140s CFR Gulf, or around $100 FOB.
One trader thought those prices pointed to the Argentine GPC reaching a floor, since $170 CFR India would also equate to around the $140s CFR US Gulf, but he also said it was "depressing” that Chinese buyers had stopped participating.
US -origin GPC contracts for Q3 were partially concluded, with buyers pointing to price drops of around $20 from Q2 on the 2% S material. Offers were reported in the $130s/dst FOB and bids in the $120s. GPC with 3%-3.5% S was indicated at around $100/dst.