High-Sulfur Petcoke Price Decline Reshapes the Asian Market

High-sulfur petcoke prices are plummeting due to China's withdrawal from this segment, pushing producers to seek new markets in India and Turkey.

Share:

The global petcoke market, a by-product of petroleum refining, is currently experiencing a widespread price drop. This decline is primarily driven by China’s reduced imports of high-sulfur petcoke following new, albeit unofficial, environmental restrictions. As a result, American, Saudi, and Russian petcoke is now in surplus on the market.

Indian and Turkish buyers have taken advantage of this opportunity to negotiate lower prices. Turkey’s imports doubled, reaching 800,000 tons between August and September 2024. Meanwhile, India has reduced its purchases compared to the same period last year, but has accumulated enough stock for the rest of the year. According to S&P Global Commodity Insights, U.S. petcoke with 6.5% sulfur content delivered to India fell below $100 per ton, marking its lowest level since 2020.

Supply Surplus Puts Pressure on Prices

The reallocation of supply to India and Turkey does not fully compensate for the absence of demand from China, a major consumer. U.S. and Saudi refineries, which primarily produce high-sulfur petcoke, face increased pressure to offload their volumes. Saudi petcoke, in particular, which contains up to 9.5% sulfur, struggles to find buyers outside of India, where some regions restrict the use of products with over 7% sulfur content.

Producers are thus forced to adjust their prices, especially given rising transportation costs. In Turkey, the situation is somewhat more favorable as increased demand slightly stabilizes local prices. However, volatility remains high, as buyers are aware of their strong bargaining power in an oversupplied market.

Impact on the Cement Industry

The cement industry, a major consumer of petcoke, is closely monitoring this situation. In India, cement manufacturers, who use this product as a fuel for their kilns, delayed purchases during the election period and the monsoon, further reducing demand. This decision, coupled with stock accumulation, exacerbates the difficulties faced by petcoke producers. In Turkey, cement producers have taken advantage of the price drop to build up low-cost inventories, anticipating a potential price increase linked to the resumption of construction activity after the summer.

However, stockpiling could become problematic if demand does not recover quickly. The intense competition among cement producers, aiming to reduce costs, is driving an increased use of alternative fuels, such as thermal coal. This exerts additional pressure on petcoke prices, which may remain below $90 per ton for delivered cargoes in Turkey.

Market Outlook and Strategic Adjustments

In the short term, the petcoke market is characterized by persistent uncertainty. U.S. and Saudi refineries, struggling to adapt their production chains, may need to consider strategic adjustments. Several refineries have already reduced their production of high-sulfur petcoke or are looking to diversify into less sulfur-restricted industrial segments.

The absence of China, even temporarily, creates a void that India and Turkey alone cannot fully fill. While demand in these countries remains robust, it is insufficient to absorb the excess supply. Consequently, a prolonged supply-demand imbalance could force some players to rethink their production and sales strategies.

Major oil producers accelerate their return to the market, raising their August quotas more sharply than initially expected, prompting questions about future market balances.
Lindsey refinery could halt operations within three weeks due to limited crude oil reserves, according to a recent analysis by energy consultancy Wood Mackenzie, highlighting an immediate slowdown in production.
The flow of crude between the Hamada field and the Zawiya refinery has resumed after emergency repairs, illustrating the mounting pressure on Libya’s ageing pipeline network that threatens the stability of domestic supply.
Libreville is intensifying the promotion of deep-water blocks, still seventy-two % unexplored, to offset the two hundred thousand barrels-per-day production drop recorded last year, according to GlobalData.
The African Export-Import Bank extends the Nigerian oil company’s facility, providing room to accelerate drilling and modernisation by 2029 as international lenders scale back hydrocarbon exposure.
Petronas begins a three-well exploratory drilling campaign offshore Suriname, deploying a Noble rig after securing an environmental permit and closely collaborating with state-owned company Staatsolie.
Swiss commodities trader Glencore has initiated discussions with the British government regarding its supply contract with the Lindsey refinery, placed under insolvency this week, threatening hundreds of jobs and the UK's energy security.
Facing an under-equipped downstream sector, Mauritania partners with Sonatrach to create a joint venture aiming to structure petroleum products distribution and reduce import dependency, without yet disclosing specific investments.
Oil companies may reduce their exploration and production budgets in 2025, driven by geopolitical tensions and financial caution, according to a new report by U.S. banking group JP Morgan.
Commercial oil inventories in the United States rose unexpectedly last week, mainly driven by a sharp decline in exports and a significant increase in imports, according to the US Energy Information Administration.
TotalEnergies acquires a 25% stake in Block 53 offshore Suriname, joining APA and Petronas after an agreement with Moeve, thereby consolidating its expansion strategy in the region.
British company Prax Group has filed for insolvency, putting hundreds of jobs at its Lindsey oil site at risk, according to Sky News.
Orlen announces the definitive halt of its Russian oil purchases for the Czech Republic, marking the end of deliveries by Rosneft following the contract expiry, amid evolving logistics and diversification of regional supply sources.
Equinor and Shell launch Adura, a new joint venture consolidating their main offshore assets in the United Kingdom, aiming to secure energy supply with an expected production of over 140,000 barrels of oil equivalent per day.
Equinor announces a new oil discovery estimated at between 9 and 15 mn barrels at the Johan Castberg field in the Barents Sea, strengthening the reserve potential in Norway's northern region.
Sierra Leone relaunches an ambitious offshore exploration campaign, using a 3D seismic survey to evaluate up to 60 potential oil blocks before opening a new licensing round as early as next October.
Faced with recurrent shortages, Zambia is reorganising its fuel supply chain, notably issuing licences for operating new tanker trucks and service stations to enhance national energy security and reduce external dependence.
The closure of the Grangemouth refinery has triggered a record increase in UK oil inventories, highlighting growing dependence on imports and an expanding deficit in domestic refining capacity.
Mexco Energy Corporation reports an annual net profit of $1.71mn, up 27%, driven by increased hydrocarbon production despite persistently weak natural gas prices in the Permian Basin.
S&P Global Ratings lowers Ecopetrol's global rating to BB following Colombia's sovereign downgrade, while Moody’s Investors Service confirms the group's Ba1 rating with a stable outlook.