Indian cement industry sources expressed shock over the latest hike in the import duty on petcoke to 10%, up from the existing duty of 2.5%.
The government announced late last week the plan to raise the import duty, just two days after the Supreme Court of India had given some relief to cement companies by exempting them from a petcoke ban in three north Indian states adjoining the national capital region. In October, the Supreme Court banned the use of petcoke in all industries around New Delhi.
"This is a steep hike," a source at a south India-based cement company said of the new duty, adding that it was a first step toward stopping petcoke imports into the country.
Around 65% of the petcoke in India is consumed by the cement sector, with 20% used for steam generation and the rest by other industries.
Although the source had been using domestic petcoke along with Indonesian/US coal for the past couple of months, he felt that international petcoke prices would come down now.
"India is the biggest market for both US and Saudi refineries and they will factor in the hike in the import duty," he said.
A west India-based trader said there were various factors being considered, with the primary ones a complete petcoke ban, a cap on sulfur content on imported petcoke and increased duties on imported petcoke.
"The move is basically to discourage imports and boost the indigenous market," he added.
He noted that this would result in a massive jump in the landed cost, as the buyer now has to pay an added 7.5% of customs duty, as well as an 18% goods and services tax on the increased value.
Increasing petcoke prices would likely benefit the coal industry, as it would eat into petcoke's price advantage, a west India-based trader said.
"We have to wait for the market to stabilize," the trader said. "I guess the situation would be much clearer by the weekend."
He said he had some inquiries for January shipments of US petcoke last week, but now the buyers want to wait to assess and reconsider the situation before they take a call on procurement.
