Venezuelan coke cut may boost USGC 4.5pc coke

Lower demand for Venezuelan coke from some buyers on the return of US sanctions, alongside mounting loading delays at the Jose port, may be helping boost premiums for 4.5pc sulphur coke to 6.5pc sulphur coke in the US Gulf coast (USGC).

The premium for fob US Gulf mid-sulphur coke to high-sulphur coke has ranged from $6/t-$8/t between the 24 April and 22 May assessments. This compares with $3/t-$5.50/t between 10 January and 17 April and an average of $5/t between late-October 2023, when the US temporarily lifted sanctions on Venezuela's oil sector, and mid-April 2024, when it reimposed sanctions.

The wider availability of Venezuelan 4.5pc sulphur coke as the sanctions waiver led more sellers and buyers to begin dealing with this origin was a key reason fob US Gulf mid-sulphur coke premiums were under pressure at the beginning of this year.

Now, much of this additional supply could be leaving the market. Venezuelan state-owned oil company PdV was heard to have postponed some May and early-June coke shipments earlier this month because of prolonged maintenance on a conveyor leading to the Petrocedeno terminal and other infrastructure troubles. Loading rates were already slowing at the Jose port in March, as equipment began breaking down after a frenzied export rush in late-2023 and early-2024. This pressured some traders who had counted on delivering cargoes prior to the sanctions waiver expiring. It also resulted in high demurrage costs for traders.

As a result, some are shifting vessels to load at other areas of Jose, such as a floating crane mid-streaming anchorage using barges. In addition to the maintenance issues, some customers have had loadings delayed because another customer with a closer relationship to PdV was given priority, market participants said.

In addition to the lower shipments on infrastructure challenges, demand is also falling because of the sanctions. Certain large buyers in key regions like India and Turkey have backed away from Venezuelan coke. Financing has also become more challenging. While some Indian banks have continued backing Venezuelan coke trades, they are asking for a full and transparent chain of transactions and reliable counterparties, a trader said.

India is now likely to only take 2-3 cargoes/month, down from 3-4/month during the sanctions waiver period, the trader said. To convince buyers to take new cargoes, Venezuelan coke exporters have to widen discounts to the US origin further, another trader said.

One cargo that was originally loaded for China in April ended up being offered to buyers in India for several weeks, most recently at around $112/t cfr east coast India without attracting interest, the first trader said. There are still three or four Venezuelan coke cargoes already loaded and set to arrive in India by the end of June or first-half of July that are still seeking a buyer, one cement maker said. These cargoes were offered at $107-108/t cfr west coast India, while bids were $4/t lower. But for cargoes not yet loaded, sellers were understood to keep offers at about $108-110/t cfr west or east coast India in order to cover their high expenses.

Another challenge for sellers is that the Indian market is not particularly sensitive to sulphur content, unlike the China or Mediterranean markets. The recent increased focus on Indian high-sulphur buyers is another reason the gap between mid- and high-sulphur US-origin coke is growing.

In Turkey, the most recent bids for Venezuelan mid-sulphur coke were at only $85-88/t cfr, compared with trades for high-sulphur US Gulf coke at about $87-88/t cfr and the latest Argus 5.5pc sulphur dry basis US-origin coke assessment at $90.50/t cfr, suggesting certain buyers are willing to pay a larger premium for US-origin supply.

By Alexander Makhlay, Ajay Modi and Lauren Masterson