An Indian Supreme Court ruling to ban the use of petcoke in India’s National Capital Region (NCR) is likely to increase cement prices in northern India, as produces are expected to switch to higher-cost fuels.
The ban will impact cement producers in the states of Uttar Pradesh, Haryana, and Rajasthan, while all contain districts that fall under the NCR. These producers will be required to use either domestic or imported coal from 1 November 2017, resulting in an increase in power and fuels costs.
According to India Ratings and Research (Ind-Ra), “cement producers will pass on this increase in costs to the final consumer, leading to an increase in cement prices.”
Petcoke is a key fuel for the Indian cement industry. According to Ind-Ra, usage ranges from 100% of total fuel consumption at Shree Cement to 62% of total fuel consumed at Ambuja Cements.
Power and fuel costs vary from highs of INR852 per tonne of cement at Ambuja and INR856 per tonne at J.K. Cement to INR425 per tonne at Shree Cement, according to Ind-Ra. The petcoke ban could add an additional INR8 – 10 per tonne to fuel and power costs.