India's Supreme Court has finalised a ban on petroleum coke imports that exempts some key industrial users like cement.
But other main importers, including calciners, aluminium smelters, and steelmakers, were not specifically left out of the ban, leaving their demand in question for the moment.
The court, in a ruling released this weekend, agreed to put into place recommendations from the court-appointed Environment Pollution Prevention & Control Authority (EPCA) to limit imports only to those industries using coke as a feedstock or in the manufacturing process, not as a fuel. The EPCA had listed those industries as cement, lime kilns, calcium carbide and gasification. "Import should be allowed only for these industries in the country", the EPCA said in minutes from an 18 July meeting.
Supreme Court justices Madan Lokur and Deepak Gupta ruled that the EPCA's decision, as written in the minutes from that meeting, should be "notified and implemented with immediate effect".
This decision should come as a relief to cement makers, which are by far the biggest coke importers. These buyers, wary of being included in a ban, have been hesitant to book additional coke cargoes throughout this year. The court has been evaluating the possibility since last autumn.
Cement makers purchase the majority of imports, taking 2.2mn t in the first half of this year, and 7.7mn t in full-year 2017, according to shipbroker data. This was 56pc and 63pc of all coke shipping to the country, respectively.
The exemption for the cement industry was not unexpected, but having a final ruling in place might free up more buyers to make purchases. This could revive activity in this market. But buyers may continue to focus on US Northern Appalachian coal depending on the cost differential between the two fuels, especially considering that the government raised the import tax on coke to 10pc last December.
The inclusion of gasification will also be a relief to Reliance Industries, which has said it is planning to start up a large gasification project sometime this quarter. At full capacity, the project would use about 3mn t/yr more coke than the company's massive Jamnagar refinery can produce, making it likely that the project would have at least some need for imports.
But the ruling could disrupt activity in the anode-grade and low-sulphur coke markets. Petroleum coke calciners, which import anode-grade green coke to calcine as a feedstock for aluminium anodes; aluminium smelters, which import calcined coke for the same purpose; and steelmakers, which import low-sulphur fuel grade coke for use in blast furnaces, were not among the four industries specifically allowed to continue importing.
The Aluminium Association of India and Indian Steel Association have appealed to the court to allow imports. The court is still considering this request. A hearing on the issue has been set for 9 October, as the government said it needs about eight weeks to conduct studies and set standards for the aluminium industry.
But this is a long time to wait. A ban is particularly disruptive for calciners and aluminium smelters as there is no substitute for petroleum coke in the anode-making process, and there is not enough anode-grade coke produced domestically in India to satisfy demand. Indian calciners may have a difficult time meeting required calcined coke specifications if they are limited to domestic green coke. Smelters, which had been buying more calcined coke from China recently as a surplus of the product there has made it less expensive, will be limited to only domestic calcined coke and importing finished anodes directly.
These industries may try to request an interim exemption, but it was not clear if the court would agree to hear the issue before October. This could in the meantime put additional pressure on calcined coke prices, anode-grade green coke prices and low-sulphur coke from the US west coast, some of which had been recently expected to sell to an Indian steelmaker.
The calcining, aluminium and steel industries combined imported 1.3mn t of coke in the first half of this year, 33pc of total imports, and made up almost a quarter of imports last year at about 3mn t.
The Paper Manufacturing Association is also applying for an exemption from the ban, but the court did not set a date to consider this request.
