US Gulf calcined petcoke pricing flat; some say market has reached a floor
US Gulf calcined petcoke prices remained flat in June, while European and Chinese prices moved in opposite directions.
The Platts monthly US CPC price assessment held at $275-$290/mt FOB US Gulf in June, unchanged from May. The assessment reflects the transactable, repeatable value of CPC with less than 3% sulfur, 300-400 ppm vanadium and typical metals, loading 30-60 days forward.
There were few transactions reported, as most participants had concluded second-quarter price negotiations but had not yet begun Q3 talks.
However, a calciner reported having concluded his first Q3 settlement in the last week of June at $295/mt FOB US Gulf for standard US Gulf chemistry to a "blue-chip" aluminum smelting group.
In contrast, another smelting group was heard to have not concluded Q2 and was holding out for numbers at the lower end of the Platts range.
An aluminum smelter buyer was heard to be negotiating a final Q2 cargo at prices within the existing Platts range. The buyer said the price would depend on the sulfur content of the material offered. "If it's lower sulfur [below 3%, then] closer to the upper limit; if it is 3.0%-3.1%, then at the lower end of the range," the buyer said.
The buyer said calciners believe the market is "quite close to the bottom. We'll see."
The first calciner source said he believed the market had not only found a floor, but was showing signs of recovery. He thought the market reached a floor in April/May.
He said the Q3 business he booked had been "a much easier sale than we thought it was going to be." He said the buyer did not make a counter-bid, but booked at the offer price, which he said was above what the buyer had paid for Q2.
The calciner said he was not doing any spot and thought the price points were unrepresentative. "I think some of it was above 3.5% sulphur and above 450 ppm vanadium," he said.
Another smelter buyer thought the market had not yet reached $275 in May, but said he had heard of some spot business concluded at $270-$275 and said buyers were targeting that range. The buyer also said the lower end of the range represented "pretty darn close to the bottom [of the market]."
A third smelter buyer had not sought quotes since a few months ago, when the company bought a spot cargo for North America at $275 FOB China. He said the offers from the US Gulf at that time were at closer to $300 FOB, which he said did not make sense, given the final destination of the cargo. He was uncertain if the US price could be finding a floor but acknowledged that Chinese CPC prices have come up since then.
A fourth smelter buyer said he had concluded Q2 pricing in a range of $280-$290, but said he had also seen recent willingness by sellers to accept below $280 on spot cargoes, but the buyer had not concluded any spot business himself.
A fifth smelter buyer said he had heard other buyers were pushing for numbers in the $270s, but said offers were in the $290s." I believe $275-$280 would be a reasonable number now that Rain has mothballed one calciner and constrained supply somewhat," the buyer said. "If not we would surely see falling prices still."
Another calciner source reported seeing Q2 settlements in a range of $280-$305/mt, with the $305 being booked earlier in the process for lower-sulfur material. He said he had not experienced pricing as low as $275.
A market observer said a $270-$280 range was "reasonable" given where green coke prices were.
European price slide continues
European calcined petcoke prices continued to come under pressure. Several buy-side sources reported concluding business at $325-$340/mt, Rotterdam basis, and some said their settlements had been $330-$340.
A refinery source said his settlements had been at $325-$370, with the $370 being booked early in the process.
But the source had no visbility on the trend for Q3, saying it would depend on where pricing settles in other regions, including the US Gulf and China. He said he had only concluded his last Q2 business in the final week of June and did not expect to start Q3 discussions until the week of July 15. Summer vacation season was likely to hamper the Q3 process, he said.
The source described Q2 negotiations as "very difficult" because the price had gone down significantly and said it was hard to see what would happen in Q3, and added, "I don't see a very nice playground for it right now."
Another refiner source also said Q2 pricing had been down to $320-$325/mt, but said the biggest change would come in second-half-year pricing, where he said a price drop of $100-$120/mt from the first-half numbers of around $420 plus was likely.
"We see the trend in CPC is down, but not sure it's reaching a floor," the refinery source said. "We know the smelters are seeing bad margins, so they're very reluctant to do anything. There are no discussions at all on second-half year pricing and there won't be until the end of August/beginning of September."
He said he had held some preliminary meetings with customers "to get an idea of their forecasts and projected demand." But there had been no price discussions.
Chinese prices rise
Tighter supply of anode-grade green coke in China resulted in CPC prices rising during June, according to market participants. The rally began toward the end of May, as refineries in China underook annual maintenance programs, reducing availability of green coke.
According to market sources, Chinese prices have rising from a low of around $250/mt FOB in the first half of May to around $260-$280/mt, depending on sulfur and metals, with offers at around $300/mt by the end of the month.
A market observer said some Chinese 2.8% sulfur material could achieve prices in the high $270s FOB range. He said no Chinese CPC would come into the US, but was still going to the West Coast of Canada.
The second smelter buyer saw Chinese prices at around $280 for a max-3% S grade, saying it was harder to get the $270s, but he thought Chinese CPC prices would retreat again once the refinery turnarounds ended.
The fifth smelter buyer said his Chinese suppliers had indicated prices below $280 FOB for 3% sulfur, but he believed prices had since stabilized and may be seeing "a potential uptick, given GPC prices are also increasing."
There were mixed indications on Indian CPC pricing in June, with many sources suggesting aluminum smelters there were struggling to find enough material. The first calciner source said smelters there were hoping to see increased Indian CPC production, but calciners there wre unable to raise output because of the restrictions and quotas in place governing green coke imports.
"It means smelters will have to import more [CPC]," the source said. "The cheapest place to import from is still China, but Chinese prices are $270-$290 FOB, depending on sulfur. CIF India is approaching $325."
But the second smelter buyer said Indian CPC had been trading into the Middle East at the equivalent of around $300-$310/mt CFR. Other Middle East CPC prices were heard in a mid-$300s CFR range.
S. American CPC, GPC stabilize
Brazilian CPC prices were heard to be finding support at the $300/mt FOB level, with Q2 settlements having been traded in a range of about $290-$310/mt.
A supplier noted that South American green coke prices had stabilized, saying Petrobras was offering at about $180/mt FOB, up from its previous cargo sold at around $160. And GPC prices in Argentina also appeared to be stabilizing.
"Everyone's been saying for months that if green coke prices are still falling, there's no reason why CPC prices shouldn't follow; well now we see green coke has stopped falling and even rising in Brazil," the supplier source said.
He said he had not concluded any Q3 business, "but I think maybe we will see an increase — a small increase, probably single digits in dollar terms, less than $10, I think, compared with Q2 — for Brazilian CPC."
With two June GPC cargoes from Argentina reportedly headed for China, several market sources said the YPF export prices appeared to have stabilized. There was some debate among participants as to the prices paid for the the latest cargo, which ranged from $190 CFR China, up to $210 CFR China, but several sources said they netted back to around $140/mt FOB, unchanged from the FOB netback for an export cargo sold in May.
"Another thing that makes me think we've seen the bottom is the last two YPF cargoes in June went for the same price as the last one in May, which is the first time in a year or more that YPF has managed to hold a line on pricing," the first calciner source said.
A smelter buyer said he had heard Chinese buyers had bid $180-$190/mt for the latest YPF cargo, which were rejected, and that the latest cargo went elsewhere.
US Gulf green coke prices appeared to be under some pressure with reports of pricing for the low-sulfur material at around the mid $140s/wmt FOB level, down from closer to $160 previously.