Petcoke discount continues to offer good potential

By Frank O. Brannvoll, Brannvoll ApS, Denmark

Coal prices stabilised after their fall in early May as geopolitical developments as well as higher oil and gas prices played their part.

The petcoke FOB price trended lower on weak demand and ample supply, testing the low 60s. On FOB and ARA basis, the petcoke discount remains in the cheap zone and offers good potential.

On 20 May 2024 the discount for 6.5 per cent sulphur petcoke FOB sold at US$62.50 is 55 per cent when compared with API4 coal sold at US$112 in the 3Q24. The CIF ARA 6.5 per cent petcoke contract sold at US$81.50 is at a discount of 43 per cent when compared with API2 coal sold at US$115 in the 3Q24. USGC ARA freight rates are at US$19.

Coal FOB price trend, January 2010-20 May 2024:

API 4 Richards Bay 6000kcal/kg (black), 6.5% sulphur USGC 40HGI (red) and 4.5% sulphur USGC 40HGI (blue)

Petcoke with 6.5 per cent S is expected to move within the US$60-70 range with resistance at US$68, US$75, US$95, US$105, US$115 and US$135. Support is at US$60, US$55, US$45 and US$38 with multi-year support at US$38. For 2024 a broad range of US$60-115 is forecast.