Very low petcoke discounts may lead to switch to coal

The price of a barrel of oil has returned to the lower end of the US$80-88 range. Gas prices were also down on the back of warm weather forecasts and the Turkey-Syria earthquakes, which are cooling demand.

Coal prices continue to slip lower, along with other sources in the energy complex, as the fear of recession persists.

The stable price of petcoke and very low discounts are expected to lead to fuel switches towards coal.

The 6.5 per cent S petcoke FOB contract sold at US$137 while the 6.5 per cent S petcoke CIF ARA contract sold at US$139. Resistance is to be found at US$143, 180 and 215, while support is around US$125, 115, 100 and 85. Multi-year support is found at US$36.

The discount for 6.5 per cent S petcoke FOB sold at US$137 is at 21 per cent when compared with API4 coal sold at US$139 in the 2Q23. The CIF ARA 6.5 per cent S petcoke contract sold at US$154 is at a discount of 10 per cent, when compared with API2 coal sold at US$138 in the 2Q23.

In terms of freight rates have edged up, threatening FOB prices with the USGC-ARA rate now at US$17.50, up from a low at US$16.