Pradeep Jaychandran, Senior Research Analyst at Beroe Inc. spoke at the annual Argus Asian Petcoke Conference 2013 ,in Singapore. In his session on Asia Rising? – Influence of Asian Metals & Materials Demand on Pet Coke Dynamics, he talked about the strategic shift in center of gravity of global PetCoke industry from North America to Asia. He explored the trends in PetCoke demand, especially from Cement, Aluminum and Steel industries in Asia and the threat by coal as a viable fuel alternative to PetCoke. The conference was attended by industry luminaries such as Dr. AS Firoz, Chief Economist with Ministry of Steel, Government of India; David Love, Director of fuel-grade PetCoke, North America, Sinoway International Holdings, Stuart B Ehrenreich, Director, Cascade Resources & Consulting, among others.

1. Influence of Asian Metals & Materials Demand on Pet Coke
Dynamics

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3. Importance of Cement & Aluminum
67%
33%
Fuel Grade
Calcined Coke
75%
25%
0%
50%
100%
150%
Aluminum Others
Calcined Petcoke End-uses
60%
40%
0%
50%
100%
150%
Cement Others
Fuel Grade Petcoke End-uses
World Petcoke Production
• Together, cement and
aluminum drive around
65% of global petcoke
demand
• However, both these
industries are suffering
from overcapacity
currently

4. Asia Rising !
• Asia has emerged as the global hub of both cement and aluminum manufacturing, which makes it the
most important demand center for petcoke
• Going forward petcoke dynamics would be dictated by the demand patterns in Asia, as it gains significance
both in supply and demand of petcoke
48%
52%
World Aluminum Production
Asia
RoW
67%
33%
World Cement Production
Asia
RoW
Strategic Shift in Supply &
Demand of Petcoke
60%
By 2015
DemandSupply
By 2015
DemandSupply
17% 7-10% 15%
The demand growth both in North America and Asia is expected to be
driven by calcined petcoke used in aluminum industry

5. Petcoke – Coal Duel in Cement
120 Million MT8 Billion MT
Global Coal Market Global Petcoke Market
Prevailing oversupply in the global coal market, is a serious impediment to petcoke demand improvement
from cement industry in Asia
Coal
Supply
Glut
Overproduction in
Indonesia
US Shale gas
revolution
• Asian cement plants have a high
dependence on coal
• Global oversupply and declining coal prices
provide little incentive to cement plants to
import petcoke
66%
34%
World Coal Demand
Asia
RoW
Advantages
of Petcoke
over coal
Lower Price
Higher sulphur
content
Coal Prices have fallen to USD 90/MT levels, making them cost competitive
with petcoke
Petcoke emits 5 to 10% more CO2 than coal on a per unit energy basis
But…

6. Petcoke – Coal Duel in Cement : From an Indian Standpoint
Declining global coal prices has reduced the difference in procurement cost between Coal India and imports
from Indonesia to just around 15% for Indian cement companies. The difference was around 30-40% in 2012.
Total Landed Cost (per MT)
INR
1259 +
FreightINR
1720
Sourcing from
Coal India
Sourcing from
Indonesia
Indonesian
Coal
Production
Cost
Indian Coal
Production
Cost
1
2
15%
• The spread between domestic and imported coal is
expected to further decrease to around 12-13% due
to declining global coal prices
• Despite shortage of coal from Coal India, cement
companies can easily import slightly more
expensive coal from Indonesia
• The high production levels and lower production
cost of coal in Indonesia is expected to keep price of
Indonesian coal below the $100/MT levels, in the
short term

7. 17
7
6
0
5
10
15
20
25
30
35
MMT
2.7
3.5
2
0
2
4
6
8
10
MMT
Asian Overcapacity !
Cement
Aluminum
Excess Capacity Expected
by 2015
Excess
Capacity
Production
2.2
0.8
0.5
0
1
2
3
4
BillionMT
China (2012)
240
60
25
0
100
200
300
400
MMT
India (2012)
China (2012) India (2012)
Overproduction
to continue in
China
Excess Capacity Expected
by 2015
Excess
Capacity
Production
Factors resisting demand
Factors supporting demand
Lack of
substitutes for
calcined petcoke
Production and
capacity cuts
globally in
aluminum
Record low
utilization rates in
Asian aluminum &
cement sectors
Sustainability
initiatives by
Chinese
government to
reduce CO2
emissions

8. Shift in Asian Steel Production
Other Metals which Affect Petcoke - Steel
67%
33%
Global Petcoke Production (2012)
Fuel Grade
Calcined Coke
Basic Oxygen
Furnace
Electric Arc
Furnace
Key Petcoke Demand Drivers in Asia
• Currently the contribution of steel to overall petcoke
demand is lower than 5%
• However, as Asian steel production shifts to using electric
arc furnaces, the demand for petcoke from steel is expected
to significantly increase
• Also, petcoke is used as a substitute to amorphous graphite
in the steel industry. Thus, during the winter season in
China when most graphite mines are shut, petcoke is
generally preferred by steel makers within and outside
China.
1
Months
PetcokeDemand
November
to March
Low
Medium
High
Seasonal Graphite Mining Trends in China2
75%
9%
16%
End-uses of Calcined Petcoke
(2012)
Aluminum
Steel (EAF)
Others

9. Asian Petcoke Demand Outlook
Short Term
Decreasing
EU petcoke
demand
Coal
supply
glut
Expected
stagnation
in Aluminum
and Cement
demand
Increase
in Asian
fuel grade
petcoke
supply
• Declining EU demand and rising Asian supply would lead
to increased availability of petcoke in the global market
• Acute overcapacities in the Asian cement and aluminum
industries would prevent any dramatic rise in petcoke
demand
• Competitive coal pricing coupled with global supply glut
makes coal attractive to Asian cement companies in the
short term
LowMediumHigh
Impact
Long Term
Low per
capita
cement &
aluminum
consumption
Anticipated
demand
from steel
industry
Strategic
shift from
west to east
in petcoke
industry
CO2
emission
reduction
norms by
Asian
nations
Demand
Prospects
Demand
Prospects
• Low per capita cement & aluminum consumption in Asia,
would drive long term production growth of both materials
• Pricing of petcoke is gaining increased transparency
through new indices such as Platts and through shift of
production from west to east
• Stringent CO2 emission norms are expected to resist
demand for petcoke in the long term

10. Thank You