Global Petroleum Coke Price Decline Amid Economic Shifts and Supply Dynamics

In the last week of November 2023, the global Petroleum Coke (Pet Coke) market experienced a significant decrease. This decline was primarily attributed to an oversupply of material in the global market and subdued regional demand. Despite concerns over the Israel-Gaza situation, which momentarily introduced a war premium, the lack of market disruptions led to a swift containment of the situation, with the focus now returning to the dynamics of demand and supply.

On the economic front, major central banks, including those in the US and EU, opted to maintain their existing interest rates during their October meetings, adhering to a "higher for longer" approach given persistently high inflation. The growth trajectory of China, particularly in its property market, is seen as a determining factor for the energy complex. The Chinese economic slowdown has notably reduced marginal oil demand, further impacting the Pet Coke market.

Shifting gears to global economic forecasts, the International Monetary Fund (IMF) updated its 2024 GDP growth projections in October. World GDP growth was adjusted downward to 2.9% from three percent, while the euro area indicator saw an increase to 1.2% from 0.7%. Downside risks, including the possibility of higher interest rates and the Russia-Ukraine war, continue to influence market sentiments. Media scrutiny of the latter conflict could potentially drive a push for negotiations, with a peaceful resolution expected to have positive implications for the Pet Coke markets.

In the energy sector, Coal prices retraced alongside oil, influenced by a lower Chinese domestic price. Higher domestic production and increased hydro and renewable generation in China led to reduced Coal imports, putting pressure on the international Pet Coke market. Russian Coal faced competition as prices dipped, and the imposition of new export taxes, depending on the rubble, added a seven percent tax.

Pet Coke continued its rally as companies sought to secure loads for the first quarter of 2024, responding to earlier higher Coal prices. However, following a drop in Coal prices, Pet Coke returned to the lower end of the discount spectrum. The lifting of sanctions on Venezuela is expected to introduce more supply to previously restricted markets. China shows interest in discounted Venezuelan Pet Coke as its total stock fell, prompting expectations of increased production and exports for Pet Coke.

The spot freight market in the US ended the month positively, with rates rising due to tight tonnage supply and sustained demand. Fronthaul trips, in particular, saw an increase as fresh Pet Coke and grain cargoes steadily entered the market. The transatlantic segment experienced fluctuations, with freight rates dropping in the first half of the month but rebounding towards the end.