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Optimising Brazil's Petcoke Supply Chain: Part 2

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World Cement,


Glaucio Roland, a specialist in supply chains, continues to discuss the necessary considerations when producing and exporting petcoke in Brazil.

Optimising Brazil's Petcoke Supply Chain: Part 2

Criteria for the assistant purchase of petcoke

Supplying petcoke in the cement industry is extremely complex and involves many variables, ranging from the occurrence of natural phenomena to the macroeconomic effects. Through research, interviews with customers, and suppliers, it was possible to identify the market factors linked to the petcoke supply chain that facilitate an assertive purchase. They include the following:

Price FOB

  • Dollar exchange: all markets and negotiations are managed in US dollars and profit is dependent on the impact of conversion in the local currency.
  • Industry production: indicator that predicts the consumption demand and the consumption trend of other industrial segments.
  • Gross domestic product: indicator that signals the economic activity market of a region and thus projects the consumption of the cement market.
  • Oil production: although the price of petcoke is not directly tied to a barrel of oil, oil production is an indicator of the inventories at large refineries and market trends.
  • Sea freight

    • Oil production: affects the ship’s fuel cost and is an important component in the cost of freight.

    Fees and taxes

    • Tax benefits: there are tax exemptions that may vary for each Brazilian state; therefore, it is important to consult a tax expert in the area.
    • Tax exemptions: depending on the origin of the imported material, it may be taxed differently. For example, the AFRMM is exempt from tax in Mercosur countries.

    Port operation

    • Port structure: the model of the unloading operation, the availability of equipment for unloading the material, and the environmental license and appropriate storage location are all important factors.
    • Productivity: draft of the port, destination and the efficiency (board of discharge) of the chosen port.
    • Occupancy rate: analyse what materials are moved in the intended port, the time of occupation of the pier, and the estimated costs of demurrage.
    • Road freight

      • Grain harvest: the period of transport competition with the grain harvest (soybean and corn) can mean a lack of vehicles and the increase of freight.
      • Synergy: evaluate the logistics of the route of the material between the port and the factory, identifying opportunities for transport synergy.

      Through analysing the influencing factors in the market, it was possible to construct a framework of factors that influence the assertive purchase of petcoke.

      Discussion of results

      To execute the process successfully, taking into account the lowest possible cost, requires the constant updating of day-to-day running and a deep knowledge of the interrelations between the several components that are part of its logistical chains.

      As a result, the Brazilian cement industry will be able to consolidate and have a visualisation of the impacts on the cost of petcoke. Monitoring the market to anticipate signals, optimising analytics, opting for more competitive suppliers along the supply chain, negotiating qualities that return with greater productive efficiency, and using ports with more  efficient and operational structure are more assertive decisions that gain a competitive advantage.

      One must keep a good inventory management, define inventory strategy, and keep inventory levels secure and adjusted, reducing inventory cost and cash flow impact. As a case analysis, there is an example of a cement industry, where the author, who utilised inventory management, obtained significant results.

      Conclusion

      Correlating all information from this article, it can be observed that the Brazilian petcoke market is competitive and dynamic.It is recommended that cement companies have a supply chain that focuses on the mapping of strategic suppliers, developing a supply chain intelligence cell, maintaining up-to-date information, as well as narrowing the gap between related areas and professionals with broad knowledge.

      Identifying market opportunities, while maintaining secure positioning of approach strategies during negotiations with suppliers, allows adjustments to the volumes available in the market according to individual needs, optimising logistic networks at the lowest cost.

      By developing the above practices in a Brazilian cement plant, it will have a competitive advantage over the others with the mapping of the entire supply chain and identifying in advance the movements that may occur in the market.

      The subject deserves more study and future research with the development of a tool to optimise the supply chain of petcoke covering all the criteria mentioned in this article, demonstrating resupply opportunities.

       

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Read the article online at: https://www.worldcement.com/special-reports/10082018/optimising-brazils-petcoke-supply-chain-part-2/

 

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