3. pranay shukla
TRANSCRIPT
Coal vs Petcoke – India Perspective
Pranay Shukla Senior Dry Bulk Analyst
Indian economy and infra sector
IMF projected that India will overtake China as the fastest growing emerging economy in 2015-16 by clocking a growth rate of
7.5%, helped by its recent policy initiatives, pick-up in investments and lower oil prices.
India would become fourth largest infrastructure projects market in the world by 2025 as real estate and construction sector is
continuously evolving in the country, according to a Royal Institution of Chartered Surveyors (RICS) report.
1,500
2,000
2,500
3,000
3,500
4,000
1 4 7
10
13
16
19
22
25
28
31
34
37
40
43
46
49
52
INFRA SECTOR INDEX
2011
2012
2013
2014
2015
Indian cement industry (Units: Million Tonnes)
-
20
40
60
80
100
120
140
160
180
South India North India Central India West India East India
Indian Cement production Capacity
CMA Members Non-CMA Members
123 , 31%
273 , 69%
Non-CMA Members CMA Members
Sector wise cement consumption and demand projections
67%
13%
11%
9%
Sector Wise Cement Consumption
Housing
Infrastructure
Commercial
Industrial
0
200
400
600
800
1000
1200
1400
1600
FY2012 FY2013 FY2014 FY2015 FY2016 FY2017 FY2022 FY2027
Cement Demand Projections (Units: Million Tonnes)
Cement Capacity Cement ProductionSource: 12th Planning Commission Source: Ambhuja Cement 2013 Annual report
Prime Minister Mr. Narendra Modi in Jan 2015 chaired a review meeting on the goal of "Housing for All" by 2022.
The meeting was to finalise the contours of the “Housing for All Mission”, which is one of the priority commitments of the
government.
The programme proposes to build 20 million houses across the nation by 2022.
Procurement of fuel
0
2
4
6
8
10
12
14
16
FY20
03
FY20
04
FY20
05
FY20
06
FY20
07
FY20
08
FY20
09
FY20
10
FY20
11
FY20
12
FY20
13
Procurement of fuel by members of CMA
Linked Coal Imported Coal Coal from OM Petcoke
In recent coal block allocations four coal blocks were
awarded as below:-
Source: CMA, Mercuria. *All units in million tonnes
** CMA – Cement Manufacturers Association
*** Coal from OM- Coal from Open Market
Coal Block
Production
Capacity Winner Remarks
BICHARPUR 0.8 ULTRATECH CEMENT
MANDLA SOUTH 0.3 JAYPEE CEMENT
SIAL GHOGRI 0.3 RELIANCE CEMENT
GARE-PALMA-IV/8 1.2 AMBHUJA CEMENT To Commence operational in 2018
*Ambhuja Cement is not a member of CMA
Petcoke imports into India in 2014 (Units : Thousand Tonnes)
0
700
1,400
2,100
2,800
3,500
USA CHN CAN SAU KWT
Origin Countrywise shipments
Petcoke Imports in 2014
-
400
800
1,200
1,600
2,000
West Coast East Coast
Origin Country - Indian coast wise
USA CHN CAN SAU KWT
Petcoke imports into India in 2014 (Units : Thousand Tonnes)
-
700
1,400
2,100
2,800
3,500
West Coast East Coast
Discharge port - Indian coast wise
TUTICORIN HALDIA PARADIP
KARAIKAL VIZAG KRISHNAPATNAM
GANGAVARAM BEDI KAKINADA
MUNDRA PIPAVAV KANDLA
NEW MANGALORE MORMUGAO
-
200
400
600
800
1,000
West Coast East Coast
Discharge port - Indian coast wise
MORMUGAO NEW MANGALORE KANDLA
PIPAVAV MUNDRA KAKINADA
BEDI GANGAVARAM KRISHNAPATNAM
VIZAG KARAIKAL PARADIP
HALDIA TUTICORIN
Thermal coal imports into India in 2014 from selected countries (Units : Million Tonnes)
0
7
14
21
28
35
SAF AUS USA
Origin Countrywise shipments
Coal Imports in 2014
-
4
8
12
16
20
West Coast East Coast
Origin Country - Indian coast wise
SAF AUS USA
Thermal coal imports into India in 2014 from selected countries (Units : Million Tonnes)
-
5
10
15
20
25
West Coast East Coast
Discharge port - Indian coast wise
-
2
4
6
8
10
West Coast East Coast
Discharge port - Indian coast wise
Distance travelled by petcoke shipments to reach Krishnapatnam (EC of India)
Days in Sea Jubail (Saudi Arabia) Shuaiba (Kuwait) Yanbu (Saudi Arabia) Nanjing (China) New Orleans (USA) Richards Bay (South Africa) Gladstone (Australia) Baltimore (USA)
Krishnapatnam 10.3 10.7 13.6 14.7 39.4 16.1 18.9 35.0
* Speed: 11.3kt's
COALPETCOKE
Distance travelled by thermal coal shipments to reach Krishnapatnam (EC of India)
Days in Sea Jubail (Saudi Arabia) Shuaiba (Kuwait) Yanbu (Saudi Arabia) Nanjing (China) New Orleans (USA) Richards Bay (South Africa) Gladstone (Australia) Baltimore (USA)
Krishnapatnam 10.3 10.7 13.6 14.7 39.4 16.1 18.9 35.0
* Speed: 11.3kt's
COALPETCOKE
Distance travelled by petcoke shipments to reach Kandla (WC of India)
Days in Sea Jubail (Saudi Arabia) Shuaiba (Kuwait) Yanbu (Saudi Arabia) Nanjing (China) New Orleans (USA) Richards Bay (South Africa) Gladstone (Australia) Baltimore (USA)
Kandla 4.3 4.8 9.1 19.0 34.9 15.8 22.9 30.5
* Speed: 11.3kt's
COALPETCOKE
Distance travelled by thermal coal shipments to reach Kandla (WC of India)
Days in Sea Jubail (Saudi Arabia) Shuaiba (Kuwait) Yanbu (Saudi Arabia) Nanjing (China) New Orleans (USA) Richards Bay (South Africa) Gladstone (Australia) Baltimore (USA)
Kandla 4.3 4.8 9.1 19.0 34.9 15.8 22.9 30.5
* Speed: 11.3kt's
COALPETCOKE
Prevailing Low Freight Rates …. Opens alternative for longer haul origins
0
500
1,000
1,500
2,000
2,500
1 21
41
61
81
10
1
12
1
14
1
16
1
18
1
20
1
22
1
24
1
26
1
28
1
30
1
32
1
34
1
36
1
Baltic Exchange Dry Index
2013
2014
2015
0
1,000
2,000
3,000
4,000
5,000
1 21
41
61
81
10
1
12
1
14
1
16
1
18
1
20
1
22
1
24
1
26
1
28
1
30
1
32
1
34
1
36
1
Baltic Exchange Capesize Index
2013
2014
2015
0
500
1,000
1,500
2,000
2,500
1 21
41
61
81
10
1
12
1
14
1
16
1
18
1
20
1
22
1
24
1
26
1
28
1
30
1
32
1
34
1
36
1
Baltic Exchange Panamax Index
2013
2014
2015
0
400
800
1,200
1,600
2,000
1 21
41
61
81
10
1
12
1
14
1
16
1
18
1
20
1
22
1
24
1
26
1
28
1
30
1
32
1
34
1
36
1
Baltic Exchange Supramax Index
2013
2014
2015
*Source: Baltic Exchange
Prevailing Low Bunker Rates
200
300
400
500
600
700
800
1 4 7
10
13
16
19
22
25
28
31
34
37
40
43
46
49
52
Rotterdam IFO 180 ($/t)
2011
2012
2013
2014
2015
200
300
400
500
600
700
800
1 4 7
10
13
16
19
22
25
28
31
34
37
40
43
46
49
52
Singapore IFO 180 ($/t)
2011
2012
2013
2014
2015
200
300
400
500
600
700
800
1 4 7
10
13
16
19
22
25
28
31
34
37
40
43
46
49
52
Houston IFO 180 ($/t)
2014
2015
200
300
400
500
600
700
800
1 4 7
10
13
16
19
22
25
28
31
34
37
40
43
46
49
52
Fujairah IFO 180 ($/t)
2014
2015
*Source: Bunker World
Fuel Price Trends
Oil crashed but still petcoke was relatively strong as petcoke
prices are more inelastic.
Coal prices are down on back of more supply than demand.
Petcoke to Coal price ratio has increased making coal more
competitive over petcoke
*Source: McCloskey; USG HS Petcoke 7500 NAR prices have been normalized to
6000NAR
40
53
65
78
90
4-J
an-1
3
4-M
ar-
13
4-M
ay-
13
4-J
ul-
13
4-S
ep
-13
4-N
ov
-13
4-J
an-1
4
4-M
ar-
14
4-M
ay-
14
4-J
ul-
14
4-S
ep
-14
4-N
ov
-14
4-J
an-1
5
4-M
ar-
15
Price movements
USG HS Petcoke (n) USG HS Coal
RB1 Coal
0.50
0.63
0.75
0.88
1.00
4-J
an-1
3
4-M
ar-
13
4-M
ay-
13
4-J
ul-
13
4-S
ep
-13
4-N
ov
-13
4-J
an-1
4
4-M
ar-
14
4-M
ay-
14
4-J
ul-
14
4-S
ep
-14
4-N
ov
-14
4-J
an-1
5
4-M
ar-
15
Petcoke vs Coal
Ratio: USG HS Petcoke(n)/USG HS CoalRatio: USG HS Petcoke(n)/RB1 Coal
40
63
87
110
4-J
an-1
3
4-M
ar-
13
4-M
ay-
13
4-J
ul-
13
4-S
ep
-13
4-N
ov
-13
4-J
an-1
4
4-M
ar-
14
4-M
ay-
14
4-J
ul-
14
4-S
ep
-14
4-N
ov
-14
4-J
an-1
5
4-M
ar-
15
Brent Price
Brent Price
Brief about Petcoke shipments/demand trend in India
RIL has started work on a $4 billion coke gasification project at its Jamnagar facility. As part of the coke-gasification
project, pet coke at the Jamnagar refinery will be upgraded to syngas for further use as fuels and for hydrogen and
chemicals production. The coke gasification project is to convert coal and coke, the lowest-cost fossil fuels, into gas.
RIL, one of the biggest domestic producers of petcoke in India, would be using its product for its own consumption,
gradually taking 6-7 million tonnes off the market by year’s end.
RIL sold petcoke in the open market for some time as it gave good returns. Now, with LNG prices soaring and
availability of natural gas a challenge, syngas is the best option available. Reliance is expected to also use imported
petcoke to feed its gasificaton project. This will mean more demand for imported petcoke into India.
The Jubail refinery, also known as SATORP, a joint venture between Saudi Aramco and Total, is expected to ship out
between three and five cargoes per month.
At the Yanbu facility, a joint venture between Saudi Aramco and Sinopec, production is expected to begin in April/May
with two cargoes initially, but that could ramp up to the same production levels as Jubail.
Conclusions
• India is well favoured for having a healthy demand vis a vis the growth figures and the Mr Modi missions, which
should help strengthen construction and cement demand.
• The country remains one of the largest growing markets for solid fuels, and in this case particularly for both coal
and petcoke
• And it makes Indian buyers have a good pick of sources for fuel: South Africa, USA or Australia for coal and
having the alternative of petcoke as well
• Indian buyers are price sensitive, so there is no real preference for the fuel they get, as long as the price is right
• India is expected to overtake Japan as the biggest market for petcoke once Reliance gassifiers become
operational