How will the increased number of refineries change the pet coke market in India? Sanjay Kumar Strategic Sourcing Director Solid fuels India 13 th Sep 2017
Index LafargeHolcim Current international market scenario Status of Refineries in India Factors determining Demand and Supply in future Impact 2016 Company
LafargeHolcim at a glance Global footprint 2,300 operating sites 26.9 billion CHF net sales 90,000 employees Listed on SIX and Euronext 2016 Company 3
LafargeHolcim at a glance We deliver innovative solutions for our clients projects, in infrastructure, building and retail. We are driven by the needs of customers, from the individual homebuilder to the largest, most complex infrastructure project. Sustainability lies at the heart of our business. Our 2030 Plan aims to improve our own operations and encourage our clients and industry to contribute. We are the world leader in building materials, with leadership positions in all our businesses: cement; aggregates; ready-mix concrete. LafargeHolcim was created in 2015 following the merger of Lafarge and Holcim. Combined, we have over 180 years of experience. 2016 Company 4
Positioned to address the needs of development Europe 21,829 North America 12,257 Africa & Middle East 13,191 Asia Pacific 31,274 Latin America 10,536 LafargeHolcim employees per region (approx.) LH integrated cement plants and grinding stations Persons / Km2 1 10 100 1 000 10 000 2016 Company 5
Our businesses - We are a world leader in building solutions Cement Aggregates Ready-mix concrete & others 56,133 employees 11,816 employees 21,257 employees 226 cement and grinding plants 648 aggregates plants 1,410 ready-mix concrete plants 233.2 millions of tonnes sales volume 282.7 millions of tonnes sales volume 55.0 million of m3 sales volume 17.952 billion CHF net sales 3.933 billion CHF net sales 5.424 billion CHF net sales 2016 Company 6
Index LafargeHolcim Current international market scenario Status of Refineries in India Factors determining Demand and Supply in future Impact
Petcoke Seaborne Market 48 Mn T 48 Mn T Major Exporters 1 Canada 35 4 USA Spain 1 3 Venezuela Saudi Arabia 7 0.1 Europe 3 13 China India 6 0,2 1 Major Importers 2 Brazil Exported Volumes 2015 2016 Δ % Canada 0,65 0,65 0% Venezuela 3,2 2,5-22% Spain 1,2 1,2 0% Saudi 2,8 3,2 14% US 35,6 35,2-1% Egypt 0,2 0,1-50% Philippines 0,2 0,2 0% Others 2,45 4,65 90% Total 46,3 47,7 3% Imported Volumes 2015 2016 Δ % Central America 4,1 4-2% Brazil 4,6 2,1-57% Europe 8,2 7,1-14% Turkey 3,9 3,6-8% Med 5,5 4,6-16% Middle East 1,3 1,9 46% Africa 1,2 0,4-67% India 8 13 63% China 5 5,6 11% Korea 0,6 1 67% APAC 3,9 4,4 13% Total 46,3 47,7 3% 8
Regional Supply Risks Historical Markets Europe New Markets 1 Canada 34 USA Spain 1 3 Venezuela Saudi Arabia 7 0.1 3 13 China India 6 Major Exporters 5 Brazil Major Importers Country Supplier Volumes Quality Malaysia Petronas 300-400 k 4.5-5.5 %S Philippines Petron 100-200 k 6-7.5 %S Taiwan Formosa 100-200k 8-9 %S 9
Coal Seaborne Market ~ 1 Bn T Major Exporters Major Importers 7 2 Canada USA 6 14 Mexico Imported Volumes 2015 2016 Chile 93 9 Variation 2016 vs 2015 (%) Colombia 10 Brazil 107 EU South Variation Africa 2017* 2017 vs 2016 (%) Mexico 6 5-12% 6 8% Chile 8 9 6% 9 6% Europe 144 105-27% 107 2% M. East 43 50 16% 55 10% India 160 133-17% 105-21% China 198 240 21% 200-17% South Asia 151 167 11% 180 8% Far E. Asia 200 193-4% 223 16% USA 8 8-4% 7-9% Brazil 9 10 12% 10 1% Others 23 15-35% 13-13% Total 950 934-2% 914-2% 76 Russia M. East 50 India 114 China 105 200 167 S. East Exported Volumes 2015 2016 350 Indonesia 223 203 AUS Variation 2016 vs 2015 (%) 2017* Variation 2017 vs 2016 (%) Canada 2 2 0% 2 0% USA 25 14-43% 14 1% Colombia 80 89 11% 93 4% South Africa 75 74-1% 76 2% Russia 103 111 8% 114 3% Indonesia 366 342-7% 350 2% Australia 202 201 0% 203 1% Total 853 833 0% 852 2% 10
CIL Production Outlook CIL s Production Plan till FY 2020 CIL Production Scenarios 1000 800 600 400 200 0 239.6 193.1 60 161 149.7 55 135 50 250 45 48 222 150 167 187 110 80 82 90 99 60.5 67 80 102 133.5 35.5 37 41 46 53 42 46.9 51.7 56.6 62 2015-16 2016-17 2017-18 2018-19 2019-20 CIL Production (MT) 950 900 850 800 750 700 650 600 550 Coal Vision (14%), 908 Optimistic (12%), 862 Realistic (10%), 802 Pessimistic (7% ), 718 ECL BCCL CCL NCL MCL WCL SECL Source: CV 2020, CRIS Research 500 2015-16 2016-17 2017-18 2018-19 2019-20 Target to produce 1.5 bt by 2020, with Coal India tasked to produced 1bt, and the remaining 0.5 bt coming from SCCL, Captive Mines and Merchant Mines. Likely Scenario could be between 1.2 to 1.3 bt by 2020 Coal India roadmap set out for 908 mt, likely to achieve 800 mt (grew 7% & 9% in FY 15 & FY 16 respectively) Singareni to produce another 75 mt by 2020 300 mt from captive mines, the overall production could be 1.2 to 1.3 bt by 2020 2015-07-07 11 Given the transportation constraints, availability to be better for plants near the pitheads.
Imported Coal scenario Units in mtpa 200 150 100 50 Coal Imported by India from Indonesia, Australia and SA (mtpa) 189 131 154 20 44 20 32 29 102 116 82 30 163 34 41 88 0 FY13 FY14 FY 15 FY16 Indonesia Australia SA Coal imported by India reached up to 189 mtpa in 2015 from 154 mtpa in FY2014. Governments is trying to increase domestic production to reduce imports For plants located in coastal areas shall continue to import coal even if domestic production will increase 12
Index LafargeHolcim Current international market scenario Status of Refineries in India Factors determining Demand and Supply in future Impact
Petcoke Sources in India (14 Mio.T) Bhatinda - HPCL Panipat - IOCL Bina - BPCL Koyali - IOCL Jamnagar - RIL Existing New Additions Haldia IOCL Paradeep - IOCL Refiner Location Cap. RIL Jamnagar 6.6* IOCL Panipat 0.8 BPCL Bina 0.5 IOCL Koyali 0.8 HPC-Mittal Bhatinda 1.1 Essar Jamnagar 1.2 MRPL Manglore 1.0 IOCL Paradeep 0.7 BPCL Kochi Kochi 1.2 Total Existing Cap. 13.9 Jamnagar - Essar Mangalore - MRPL Kochi - BPCL Vizag - HPCL Chennai - CPCL Refiner Location Cap. Date CPCL Chennai 0.5 Dec 17 HPC Vizag 0.7 2018-19 IOC Haldia 0.6 2018-19 Total Planned Cap. 1.8 * Reliance Gasification Project is expected to commence by Dec-2017 14
Index LafargeHolcim Current international market scenario Status of Refineries in India Factors determining Demand and Supply in future Impact
Global Petcoke Market : India is balancing the market Global Demand Global Driver for the petcoke market is India (highest increment in consumption) India went from 4.2 Mt tons of imports in 2014 to about 10 Mt in 2016 (all types) and is still growing Expectation for 2017 is to reach 13 Mt of imports. Growth in India provided by: Cement for LQ coke CPPs and redistribution from LLQ coke (Aramco) 16
Supply Demand Outlook Potential Scenarios India: Clean Energy Cess on Pet coke Effect CIL has been lobbying for application of Clean Energy Cess of 400 INR to 800 INR (6 to 12 USD). The will reduce the demand of pet coke and some plants will switch to coal India NGT: An order has been passed in July 17 to ban pet coke usage in India except for in Cement Kiln, subject to State clearance and MOEF licence to use the same in Cement Kiln. It was expected that this ban will lead to drop in Pet coke prices, but no such impact is visible till Sepetember 17. Linkage Auction: Demand reduction of pet coke in land locked area of India due to increased availability of Linkage auction at more competitive market. India: Gasifires increases 1 Mmt of Market for imports; Effect temporary hike in pricing, potentially partially offset by market growth in India in supply. So far no effect visible on the market, except that cement producers stocking pet coke this year in fear of not getting volume from Dec 17 onwards. 17
Supply Demand Outlook Potential Scenarios CPPs: Potential of easily 3-5 Mmt additional demand, which will/can put market to sold out at any moment, subject NGT clearance in future Delays might happen for main coker programs in India and Europe (delays are normal) + 3Mmt in India in 2017/2018 (domestic Kochi Refinery in South in 2017, Reliance expansion by 0.5 Mn T) + 1 Mmt on Seaborne and Domestic Markets in 2017 (Oman Orpic 0.5 Mn T in 2017, Duqm 1 Mn T in 2018/19) Shortages in HQ due to situation in Venezuela Demand growth also in Egypt and Africa. (+1-2 Mmt) 18
Index LafargeHolcim Current international market scenario Status of Refineries in India Factors determining Demand and Supply in future Impact
Impact Bullish In status quo scenario Demand increases more than supply Crude changing from pessimist outlook optimist (current ~50 USD/barrel to ~70 USD/barrel Higher demand in SEA / China (short term impact due to Petronas shutdown) May turn Bearish if there is government regulations on petcoke usage only in Cement Kilns strict implementation of emissions norms Policy change on Renewable resources New technological development leading to drastic price reduction (solar / wind) 20
2016 Company