There is a sort of uncertainty prevailing in Indian cement industry due to the reports that the government is contemplating a ban on import of petcoke. It is reported that Oil and Natural Gas Ministry is in favour of the ban. However, before going ahead with the decision the Environment Ministry is likely to consult stakeholders on the impact of ban on the industries. The Supreme Court (SC) had banned the use of petcoke in some North Indian states in November, 2017 as measure to improve the air quality in NCR region. The restriction was subsequently relaxed and petcoke was allowed to be used in the kilns (but banned in thermal power plants). While the ban was relaxed, import duty on petcoke was hiked from 2.5% to 10% in December, 2017.
India consumes nearly 23 million tonnes of petcoke every year of which 14 million tonnes are procured from domestic sources and the rest is imported. The cement industry accounts for 65% of India’s petcoke consumption. A ban on petcoke imports could push up the domestic price of the material encouraging the users to shift to substitute, that is, imported coal. Also, it is feared that the commissioning of Reliance’s petcoke gasifiers could lower petcoke availability by 7mt.
Currently, thermal coal imported from USA are at 5% premium over petcoke price and therefore, if petcoke is entirely substituted by imported coal it may push up the power/fuel charges for cement companies by 5-15%. As a result, cement prices would need to be hiked by 1-3% to offset the impact.