India imported about 880 thousand tonnes of petcoke in 2016; USA & China topped the exporter list

The aluminium production process requires up to half a tonne of carbon for every tonne of metal produced. Specifically ‘petroleum coke’ or petcoke, a by-product of the oil refining process, is a significant fuel for the power generation and aluminium smelting industries along with the cement industries. Anode-grade petcoke, commonly defined as that with a sulfur content of less than three percent has solid demand in the aluminium industry.

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India has seven aluminium smelters with a total installed capacity of 2.6 million tpy operated by three aluminium producers National Aluminium Co. Ltd, Hindalco Industries Ltd and Vedanta Aluminium Ltd.  India has an installed alumina capacity of 6.5.million tonnes and the reported production of alumina stands at 4 million tonnes in 2014-15. Roughly India needs about one million tonnes of petcoke every year only for the aluminium sector.  The U.S. and China are the two dominant suppliers of anode coke to the world's smelters. China has historically produced around 25 million tonnes of petcoke, of which around half is anode-grade, according to Paul Adkins of AZ China.

As shown by the data, India imported about 2,66,351 tonnes of petcoke in 2015. The amount jumped up to about 8,79,574 tonnes in 2016 indicating the quick growth in demand in India. Considering the data for the last two years, India is estimated to import 5,68,672 tonnes of petcoke in 2017. This indicates a shift towards domestic producers from its reliance on imported petcoke. Reliance and Essar that contribute 75 per cent of the 12 million tonnes of domestic production make the most of the rising demand and are expected to boost their sales volume further.

The total cost for petcoke import stood at USD 112 million in 2015, which jumped up to USD 184 million in 2016.  The cost of import for petcoke is estimated to stand at USD 145 million in 2017. It is noteworthy that the increase in cost of import does not equate the increase in the amount imported in 2016. This indicates the meltdown in global petcoke prices that took place in 2016.

Petcoke imports to India are mainly driven by USA (50%) and China (41%).

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Over the last two years, India has imposed INR300/t clean energy cess on coal, but spared ‘petroleum coke’ or petcoke from the carbon tax.  This, coupled with a meltdown in global petcoke prices, triggered a huge demand for petcoke in India to replace coal.

According to a Platts report, India and China are taking different course on petcoke consumption as China is currently on a drive to curb the use of the polluting fuel. On the contrary, Indian consumption is expected to reach new high due to the increasing cost of coal and growing aluminium production. The report expects India to reach 10 million ton import mark by the end of 2017.