Argus_Petcoke_Mumbai_Jitendra_Final

27/04/2016
Use of Petroleum Coke rather
than Coal in Current Market
Atmosphere
Jitendra Roychoudhury

2
Argus Asian Petroleum Coke - 2016
Petroleum Coke – Can it change the dynamics in India?
 Cement – production constrained
 Coal – massive increase in production
 Petroleum coke – domestic capacity and global
dynamics
 What happens in India?

Introduction: KAPSARC’s
mission and structure

4
Advance understanding of energy economics and act as a
catalyst for dialogue, charting a path to better welfare for
societies, locally and globally.
Strategic Objectives
Develop sustainable economic frameworks that lead to:
• Lower societal costs of energy supply
• Higher value created from energy consumption
• Better alignment between energy policy objectives and
outcomes
An independent non-profit research center focused on energy
economics & policy

5
Research Programs and Focus Areas

6
A KAPSARC research paper
Discussion Papers
A short, 7-10 page, non-attributional,
summary of a KAPSARC Energy
Workshop
Workshop Briefs
Databases (such as policy dB,
weather … etc.) or “tools” such as
models (e.g. CGE model source code
or models for collective decision-
making processes)
Tools and Datasets

Cement – growth constrained

8
Cement production continues to grow
Source: Office of Economic Advisor
 Muted growth – 4.5 % CAGR, capacity utilization at 70%.
 Governments infrastructure spending should push growth. Production capacity expected to
reach 500 Mt by 2020.
0
50
100
150
200
250
300
FY 2009-10 FY 2010-11 FY 2011-12 FY 2012-13 FY 2013-14 FY 2014-15
Cement Production (Mill Tons)

9
Real estate and funding issues in infrastructure
-
5.00
10.00
15.00
20.00
25.00
30.00
Cement Production (Mill Tons)
 Recent events have affected monthly production – drought, banks, infrastructure
 Expectations remain strong on the back of a better monsoon
Source: Office of Economic Advisor

Current thermal coal market
scenario

11
Thermal coal is strong
Source: HDR Salva, ICMW
 Strong domestic production, imports growth muted
0
100
200
300
400
500
600
FY 2009-10 FY 2010-11 FY 2011-12 FY 2012-13 FY 2013-14 FY 2014-15
Thermal Coal Consumption (Mill Tons)
Domestic Production Imported Coal

12
Coal production continues to grow
Source: ICMW, HDR Salva
 Imports have declined as domestic production has increased and mine stocks utilized
 Port stocks had risen as imports had languished.
-
10.00
20.00
30.00
40.00
50.00
60.00
70.00
80.00
Coal Market Developments
Imported Coal (Mt) Domestic Production (Mt) Mine Stocks (Mt) Port Stocks (Mt)

Pet Coke Supply Scenarios

14
Petroleum coke consumption grows
-
2.00
4.00
6.00
8.00
10.00
12.00
14.00
FY 2009-10 FY 2010-11 FY 2011-12 FY 2012-13 FY 2013-14 FY 2014-15
Petroleum Coke Consumption (Mill Tons)
Petroleum Coke Production Petroleum Coke Imports
 Increase in domestic pet coke production as refineries are using cheaper and heavier
crude oil.
 Consumption rising as cement plants switch to higher cv pet coke. Railway logistics being
constrained means using pet coke is a better option when compared to lower cv coal.
Source: ICMW, KAPSARC Analysis

15
Additional Capacity on the Way
2012-13 2013-14 2014-15
IOC, Guwahati 55,000 61,000 60,000
IOC,Barauni 142,000 124,000 132,000
IOC, Koyali 606,000 681,000 761,000
IOC, Digboi 40,000 35,000 35,000
IOC, Panipat 885,000 978,000 869,000
IOCL, Bongaigaon 129,000 128,000 139,000
NRL,Numaligarh 65,000 67,000 93,000
MRPL, Mangalore - - 367,000
RPL, Jamnagar 2,873,000 2,799,000 2,844,000
RPL,SEZ 3,578,000 3,849,000 3,600,000
EOL, Vadinar 1,739,000 2,112,000 2,248,000
BORL, Bina 410,000 438,000 530,000
HMEL, Bathinda 457,000 795,000 770,000
10,979,000 12,067,000 12,448,000
Current Capacity (t) Planned Capacity (t)
Source: MoPNG Stats, KAPSARC Analysis
Operational /Planned
CPCL (MRL), Manali 500,000
IOC, Paradip 1,250,000
NOCL, Cuddalore 400,000
BPCL, Kochi 1,300,000
IOC, Haldia 500,000
3,950,000
 Pet coke capacity will increase
from 12.44 Mt to 16.35 Mt
 Need for transportation fuels will
drive further pet coke capacity
Source: MoPNG Stats, KAPSARC Analysis

16
Imports show strong growth
0.0
1.0
2.0
3.0
4.0
5.0
6.0
FY 2009-10 FY 2010-11 FY 2011-12 FY 2012-13 FY 2013-14 FY 2014-15
Petroleum Coke Imports (Mt)
 Rising costs and squeezed margins in cement = pet coke imports

17
Impact of global dynamics – higher imports
 Greater availability, impact of Chinese policy constraints, start of YASREF
0
0.2
0.4
0.6
0.8
1
1.2
1.4
Apr-09
Jun-09
Aug-09
Oct-09
Dec-09
Feb-10
Apr-10
Jun-10
Aug-10
Oct-10
Dec-10
Feb-11
Apr-11
Jun-11
Aug-11
Oct-11
Dec-11
Feb-12
Apr-12
Jun-12
Aug-12
Oct-12
Dec-12
Feb-13
Apr-13
Jun-13
Aug-13
Oct-13
Dec-13
Feb-14
Apr-14
Jun-14
Aug-14
Oct-14
Dec-14
Feb-15
Apr-15
Jun-15
Aug-15
Oct-15
Dec-15
Feb-16
Petroleum Coke Imports (Mill Tons)

18
Global Dynamics of pet coke
1,000
3,000
5,000
7,000
9,000
11,000
13,000
15,000
Apr-09
Jun-09
Aug-09
Oct-09
Dec-09
Feb-10
Apr-10
Jun-10
Aug-10
Oct-10
Dec-10
Feb-11
Apr-11
Jun-11
Aug-11
Oct-11
Dec-11
Feb-12
Apr-12
Jun-12
Aug-12
Oct-12
Dec-12
Feb-13
Apr-13
Jun-13
Aug-13
Oct-13
Dec-13
Feb-14
Apr-14
Jun-14
Aug-14
Oct-14
Dec-14
Feb-15
Apr-15
Jun-15
Aug-15
Oct-15
Dec-15
U.S. Petroleum Coke Exports (Mbbl)
U.S. Exports to China U.S. Exports to Japan U.S. Exports to Brazil U.S. Exports to India
U.S. Exports to Turkey U.S. Exports to Mexico U.S. Exports to Spain
 Global pet coke dynamics played a huge role in increased exports to India
Source: U.S.EIA

Pricing and Global
Dynamics

20
Price Dynamics of pet coke
 Supply dynamics, shale oil pet coke and Chinese rumours
Source: Platts

21
Pet Coke and Coal pricing
Source: IHS
 Markets corrected as coal prices declined and new pet coke supply came online

22
 Coal – east coast ;
transportation over a
congested railway network
 Cement plants – widely
distributed – near demand
centers as well as mines
 Ports – widely dispersed but
challenge of congestion and
evacuation
Fuel supply – mix of
Challenges and
Opportunities

23
Opportunity - Supply glut may soften pet coke prices
U.S. Pet Coke
Saudi Pet Coke Pet Coke diverted from
China, because of air
quality concerns
Increased domestic
production in India
Increase in LNG,
heavier Canadian
crude, Shale oil

24
 Supply from US/Canada will continue; Shale oil produces medium
sulphur pet coke. Heavier Canadian crude is locked to US refineries;
 Chinese uncertainty: Imposition of sulphur constraints in China will mean
that cargo might be diverted to India;
 Increased pet coke production within India will mean that domestic
availability might start setting the price bottoms;
 As Coal India continues to increase production, government might use
pricing and policy to curtail pet coke imports; Commercial mining might
further affect the pet coke dynamics;
Implications

Jitendra Roy Choudhury
Jitendra.Roychoudhury@kapsarc.org
T +966 11 290 3181
www.kapsarc.org
Thank you for your attention

Argus_Petcoke_Mumbai_Jitendra_Final

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