Mediterranean find petcoke cheaper option

Mediterranean find petcoke cheaper option
Published: 22 February 2007

Cement makers in Turkey, Greece and Italy are seeking more steam coal to replace expensive petcoke for 2007 delivery, traders and cement industry sources said.

Spot petcoke for delivery within the next three months is currently trading at just under $100/t, they said.

Although petcoke has a higher calorific value (cv) than steam coal (7,500kc/kg compared with around 6,000kc/kg for coal), steam coal is cheaper at $78 at cost/insurance/freight (CIF) a ton, they said.

Some of the larger Mediterranean cement makers, such as Greece’s Lafarge, will continue to use petcoke for the bulk of their fuel needs this year because they have renewed term contracts at far lower prices – close to half the current spot price. The majority of smaller cement makers and some of the larger ones, however, are switching to steam coal for the majority of their fuel.
This switch is because of high petcoke prices and difficulty in obtaining the tonnage requested from US petcoke producers and suppliers.

In the fourth quarter, cement makers said they had been asked to pay over $80 CIF for 2006 term petcoke supply, which made steam coal a cheaper option.

Europe as a whole consumes around 15Mta of petcoke, most of which is used by the cement sector.

If only one-third of Europe’s petcoke consumption is replaced by coal, this would be a significant increase in demand in the otherwise weak Atlantic market, traders and producers said.

Power generators, the largest consuming sector for coal, are overstocked and oversupplied because last winter was mild and their coal burn was below expectations. Generators are not expected to return to the spot market for coal until at least the third quarter, traders and producers said.