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Iran Conflict Threatens India's Pet Coke Supply
4 Mar
Summary
- US-Israel strikes on Iran raise fears of pet coke shipment disruption.
- Indian cement producers heavily rely on pet coke for fuel.
- Supply shocks could force switch to expensive coal or US pet coke.
Joint US-Israel operations targeting Iran have amplified concerns over the stability of petroleum coke (pet coke) shipments from the Persian Gulf to India. Pet coke, a vital component derived from oil refining, is essential for India's burgeoning cement and steel industries.
The geopolitical tensions, particularly around the Strait of Hormuz, pose a significant risk to the transit of pet coke. Kpler, a data analytics firm, highlights that increased risk in this critical energy choke point will likely lead to higher freight costs and a potential lack of insurance for vessels.
Indian cement manufacturers, who depend on pet coke as a primary fuel and operate on tight margins, are particularly vulnerable. A prolonged disruption, even for a few weeks, could compel them to seek alternative fuels like domestic or imported coal, or pivot to pricier pet coke sourced from the US.
India's consumption of pet coke has seen a steady rise, importing nearly half of its requirements in recent years. The disruption could tighten global supply, driving up competition for alternative solid fuels such as US pet coke and thermal coal from various global sources. These substitution flows and cross-fuel price spreads will significantly influence market dynamics.
