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Current CFR pet coke price not viable for Indian consumers

December 6: The current landed cost of imported petroleum coke (fuel grade) of around $100-104 per ton CFR is not viable for Indian consumers, feel industry experts.

“The current landed cost of pet coke, because of high freight rates, make it unviable compared to domestic prices, which are moving around Rs 6,500 per ton. In such a scenario, imports of the material are not viable,” they said.

The current prices of pet coke FOB US Gulf are at $58-60 per ton and if the material is brought through Supramax vessels, the freight comes to around $52 per ton, putting the CFR cost at $110 per ton.

The freight rates of Panamax vessels are hovering around $40-42 per ton and if the material is brought by such vessels, the CFR price would be $100 per ton.

“The above two options are unviable for Indian consumers because using the imported material in such a scenario not only becomes costly, but also a tedious exercise compared to buying it in from domestic sources. In domestic purchase, there is freedom to select the quantity and delivery period. Besides the exercise involves less investment compared to imports,” an official from a leading cement company said.

“The only attractive option left for imported pet coke is to bring it in Mini Cape vessels (110,000 tons) where the freight falls to around $35-36 per ton and the CFR price comes to around $95-96 per ton,” he said.

“But here the problem is, even if the biggest parcel size is procured (via Mine Cape vessels), the CFR price comes to around Rs 5,900-6,000 per ton, which is still higher than the domestic price of Rs 6,500 per ton, if other charges involved with imports are also included,” the official said.

“However, if the net CFR price for imported pet coke comes to around $92 per ton, either due to a fall in the FOB price or drop in freight rates, it can become viable to some extent for some Indian consumers,” he said, adding: “Even then, only a handful of Indian companies like ACC and Ambuja Cement combine of Holcim, UltraTech and Shree Cement can afford to bring in imported pet coke by Mini Cape vessels.”

A section of experts, however, feel imported pet coke could become viable in the coming days as freight rates as well as FOB prices may soften once Europe goes into Christmas holiday mood starting middle of December.

“However, the first and second weeks of January 2014 are likely to be the ideal time to negotiate imported pet coke as, by then, Europe would be back in the market and the FOB price as well as freight rates are likely to remain soft,” the experts added.