Calcined petcoke prices fall further on ample supply
US calcined petcoke prices fell in September as suppliers sought to place cargoes in well-supplied Western markets due to the absence of Chinese and Indian buyers. The month saw several atypical deals for single cargoes shipping in nearby months, as well as Q3 contract bookings on a delivered basis that netted back to lower FOB values.
The Platts monthly US CPC price assessment fell to $380-$405/mt in September from $405-$425 in August. The assessment reflects the transactable, repeatable value of CPC with less than 3% sulfur and 300-400 ppm vanadium, loading 30-60 days forward.
A couple of late Q3 bookings were finalized as the month began, settling at around $405 FOB Gulf. In addition, a handful of Q3 and Q4 deals and offers were reported at $430-$450/mt CFR in EMEA region, which would net back to less than $400 FOB US Gulf or FOB US West Coast. One of the deals was for CPC with max 3.5% S and 450 ppm V.
Two aluminum buyers also reported offers at $415 CFR Middle East for US-origin CPC with typical specs, which could net back to as low as $365-$370 FOB.
On the low end, aluminum buyers reported paying either side of $360/mt FOB US Gulf for single cargoes for delivery in October and Q4, with less than 3% S, max 400 ppm V and typical metals specifications. Market participants speculated that a cargo from the Gulf priced that low for delivery in October may have been CPC originally intended for India which became excess because of the country's current ban on petcoke imports.
India exemption expected
The Indian Supreme Court is due to hold a hearing on the aluminum industry's appeal of the petcoke ban on October 9, and most market participants expect an exemption to be granted for the aluminum industry sometime after that.
"The Indian material that was coming out is now being sucked up [domestically]," said a refiner source, who speculated that this had caused problems both for suppliers shipping into India and those who had commitments for exports out of India. "They are probably covering that with Gulf Coast material; so the stuff they were exporting to the Middle East and places they will try to keep and cover from the US."
The refiner added, "It's putting pressure on the whole Western market, for a temporary period, but it will go the reverse way."
Perhaps for that reason, other CPC pricing indications in September were mixed. Buyers were still haggling over Q3 and second-half year contract prices for CPC from the US West Coast, with several reporting a firm offer of $415 FOB, but saying they were holding out for lower. One thought he could get $400-$415, but another had already booked at a higher price than $415.
Middle Eastern prices again traded at parity with other regions, which implied lower FOB prices. Local supply was booked for Q3 at $425 FOB or around $433-$440 landed. Low-sulfur European CPC sold for Q3 into the region at $425 FOB Rotterdam, and Brazilian material at $405-$410 FOB Brazil, but Brazilian CPC otherwise had sold at $420-$440 FOB.
Chinese CPC sellers raise offer prices
Price direction for Chinese CPC was also unclear. Indian buyers, who previously had paid $355-$360 FOB China for cargoes due to ship in August or September, found they could not load them because of the Indian import ban. Chinese sellers also raised their offer prices after their government imposed a retaliatory 25% tariff on US imports of petcoke, causing green coke prices in China to rise.
While most buyers and sellers agreed that Chinese CPC prices were still around $370-$400/mt FOB, depending on quality, one buyer had paid just over $410/mt FOB China for a cargo delivered in October, and another buyer had paid just under $400 FOB for a cargo shipping in late Q4; both cargoes with sulfur around 3%, less than 400 ppm V and typical metals.
A third aluminum company found it difficult to even get offers on a Chinese cargo for late Q4 and was offered above $400 FOB, but thought it was only because Chinese suppliers did not want to commit that far forward because of China's planned winter shutdowns.
China's winter shutdown period is not expected to cause a surge in CPC prices as it did last year, however, as so far no anticipatory overstocking has been seen. Anode prices have stabilized at around $620-$650/mt FOB China, but aluminum buyers saw them potentially decreasing further because of lower Chinese domestic market prices. One buyer said that Western anodes were becoming more competitive against Chinese anodes as a result.
"Although this is normally a nervous period, we believe this time is different with all the curtailments in China," said an aluminum buyer with insights into China. "We know smelters in China have started curtailing and there is no stockpiling. I tell you there's no demand in China, and demand from the export market is not healthy."
He said he was "much more relaxed than last year" in his market outlook and thought Chinese CPC prices would fall in Q4.
A calciner source disagreed. "We think there is a possibility of upside, or at the very least a floor on the price. Chinese prices are edging up a bit," the source noted. "Even if smelters do cut back for winter, the calciners will too, and they also have to pay 25% on US green coke imports, so I don't see any downside there, quite the opposite, actually, which should underpin everything else."
Most market participants expect India to lift the ban on petcoke imports for the aluminum industry, but the question was how long that process might take.
"If the exemption is lifted in, say November, then you're going to get a lot of pent-up demand unleashed for green coke, which could very easily be met with a quick response on the price," predicted the calciner source. "Not only that, people will be scrambling for ships, which could push freight rates up."
He said by November, calciners in India would have run out of anode green coke. He said a decision could come as early as the middle of October, but added the Indian legal process could take one to two months longer.
Aluminum buyers point to ever-weakening prices for low-sulfur GPC outside of China, and pressure on fuel-grade GPC because of the China import ban. A Brazilian low-sulfur GPC cargo was heard to have sold to China at around $240-$260 CFR, which would net back to around $200 FOB. Others said this may have been a non-repeatable deal and that $250 FOB Brazil was the offer level.
This followed tenders for Argentine low-sulfur GPC that went at $280 CFR US Gulf in August, for shipment in September, and a September tender where results were not yet known at the end of the month. A trader said if this cargo also sold for $240 CFR that would net back to $180-$200 FOB Argentina.
Low-sulfur GPC from P66's Immingham plant was also still reported to be on offer by a trader who had bought it in May at $257.50 FOB and was reportedly paying to store it.
The deals were expected to put pressure on US anode-grade GPC, for which Q4 contracts were not yet finalized.