Pet Coke Prices in Brazil Declines Amidst Heavy Discounts and deteriorating demand

After two months of seemingly unchanged prices, the Brazilian Pet Coke market finally witnessed a long-awaited downturn in early May 2024. This shift was primarily driven by heavy discounts and a dynamic coal market which widened the gap between Coal and Pet Coke margins. This dramatic difference in pricing made Pet Coke a much more attractive option for buyers in the Brazilian market.

The market of Pet Coke in Brazil witnessed a slump after the Easter holiday due to the typical decreased activity during this period. Additionally, heavy discounts offered by Venezuela further contributed to the market downturn. This influx of competitively priced Venezuelan Pet Coke likely impacted demand for products and hence with a drop of 4.5%, the prices settled at USD 458/MT Petroleum Coke Calcined Grade CFR Santos on 10th May 2024. Adding fuel to the fire falling freight rates further enhanced the deal for Pet Coke buyers. This decrease in transportation costs made Pet Coke even more economical, creating an additional incentive for market participation. High port inventories and subdued demand from the construction sector further limited trading activity. The sluggish construction market can be attributed to various factors, including inflation and potential project delays due to upcoming elections. The Brazilian Bank cautioned market players not to expect the projected interest rate cuts from the previous year until the inflation target of 2% was reached. This economic reality likely dampened some purchasing power.

However, the market had a temporary surge following the heavy rains, but the issue was swiftly resolved by redirection of tonnage from Baltimore. Rates were flat and the transatlantic segment appeared to be quiet. By May 10th, officials hope to remove the Dali from the area, and by the end of the month, they hope to allow all vessels, even the largest container ships, complete access again.

As per ChemAnalyst, the Pet Coke prices in Brazil are expected to showcase further downtrend on the back of subdued demand from the downstream construction industry and the influx of heavy discounts from Venezuela. A significant surge in new cargo orders is needed to reignite activity. However, the potential lifting of US sanctions on Venezuelan exports by the end of July election day in the USA could create buyer hesitation. This uncertainty might lead buyers to postpone entering into new contracts, potentially impacting Venezuelan sales and could decrease the supply which in turn raises the potential prices of Pet Coke in July 2024.