Pet Coke Markets React: Prices Rise Amidst Construction Resurgence and Economic Signals

During the second week of August 2023, Petroleum Coke (Pet Coke) prices in the US market underwent a modest 0.7% increase. The demand for Pet Coke within the downstream construction industry showed a slight uptick while the supply of this resource remained stable. Furthermore, there was a surge in international demand for Pet Coke as construction projects regained momentum following unfavorable weather conditions, thereby driving a heightened global market demand.

According to the U.S. Bureau Of Labor Statistics, the Producer Price Index for final demand exhibited a 0.3% growth in July after adjustments were made for seasonal fluctuations. This followed a period of unchanged prices in June and a 0.3% decline in May. In unadjusted terms, the index for final demand demonstrated a notable 0.8% advancement over the preceding 12 months leading up to July. The escalation in final demand prices for July was predominantly influenced by a 0.5% rise in the index for final demand services, while final demand goods experienced a slight 0.1% increase. Notably, the index for final demand, excluding food, energy, and trade services, displayed a significant 0.2% upswing in July. This uptick marked the most substantial increase since the 0.3% growth witnessed in February. Over the 12 months ending in July, prices for final demand (excluding food, energy, and trade services) advanced by 2.7%.

Similarly, in Europe, the price of Pet Coke also observed an approximately 0.7% increment during the second week of 2023. This price increase was primarily attributed to the elevated costs of importing Pet Coke from countries such as the United States, Venezuela, and Saudi Arabia. However, the demand for this Pet Coke from the downstream construction industry was somewhat subdued due to prevailing global inflationary pressures.

According to the Federal Statistics Office (Destatis), Germany's housing crisis is predicted to escalate further. This is evidenced by the sharp decline of 25.9% year-on-year in building permits for dwellings during May. In anticipation of this decline in new construction projects, manufacturers have adopted a cautious approach, refraining from bulk procurement of essential raw materials like Pet Coke that are required in the construction sector.

Furthermore, after experiencing four consecutive months of decline, inflation rebounded by the end of Q2, which undermined the market sentiments of Pet Coke manufacturing firms. Responding to this, the European Central Bank (ECB) took the unprecedented step of increasing interest rates to 4% in an effort to curb spending and mitigate inflation which further impacted the demand for Pet Coke in the European Region.

On a different note, water levels on the river Rhine in Germany rose significantly following heavy rainfall in southern regions. However, in the northern areas, the river remains too narrow for cargo vessels to operate at full capacity. Due to dry weather in June, the river's depth decreased, making it challenging for vessels to sail fully loaded. Consequently, vessel operators imposed surcharges on freight rates to compensate for vessels sailing with reduced cargo, leading to increased costs for cargo owners.

According to ChemAnalyst, the price of Pet Coke may increase in the second half of August 2023 as the price of upstream Crude Oil is anticipated to increase in the global market due to increased demand and popularity of Pet Coke.