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Pet Coke and the American perspective

Published

8 years ago

March 31, 2017

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US oil firms produce large quantities of pet coke, which is expensive to store. Because of this, these companies are keen to sell their pet coke to energy-hungry developing nations, says JONATHAN LYONS. Pet coke is produced in the refining of extra-heavy oil sources, such as Canada’s oil sands. It is a by-product of crude oil refining and other so-called "cracking" processes. Cracking breaks down complex organic molecules into simpler, more valuable, lighter petroleum products.

Pet coke has economic value as a fuel source – a fuel source that has been embraced by the cement industry. It is generally used as an inexpensive alternative to coal for energy generation. While pet coke is used to provide carbon for the production of metals such as aluminum, steel, and titanium dioxide, most pet coke is used as a fuel source. The United States, where it is generally viewed as a waste product of refining processes, exports pet coke. In fact, it dominates the market for exporting pet coke. China, Japan, and India each import pet coke for use as a fuel source from the United States.

Canada also produces pet coke in its refining processes and exports it. The price of pet coke has been falling for several years now, and this trend continues; that economic incentive increases the allure of pet coke as a fuel source. The cement industry reaps the economic benefits of that trend, and this is particularly true of companies that use multi-fuel-source plants to produce cement. In fact, pet coke makes up 30-40 per cent of the fuel that drives cement manufacturing companies. It is the preferred fuel of the industry. Unfortunately, pet coke, being high in contaminants, is a very dirty alternative to coal for energy generation. Concerns A few years ago in Detroit, Michigan, USA, hills of pet coke began to appear along the city’s riverfront.

Those hills were growing, and people began to take notice. The growing and multiplying mounds raised concerns over the potential health and environmental hazards of pet coke. Studies found that pet coke tended to be stable in this form. However, so-called "fugitive dust" – that is, petcock dust wafted away from these storage sites by the wind – has been found to pose certain risks. Particulate matter is a mix of a number of airborne microscopic solids and liquid components. These particulates, especially those of 10 micrometers in diameter or smaller, can pass through the throat and nose and enter the lungs, can get deep into the lungs, and may even get into the bloodstream, posing serious health threats. Older people and people suffering from heart or lung disease are at an increased health risk.

Particulate matter can worsen such conditions as chronic obstructive pulmonary disease (COPD), coronary artery disease, and more. Exposures have been linked to heart attacks and arrhythmias in those suffering from heart disease, for example. Air quality monitoring equipment on the sites hosting such stockpiles of pet coke consistently measures concentrations of particulate matter of this scale escaping on the wind. The combustion of pet coke is also problematic. Burning pet coke can have adverse environmental impacts. Its use as a fuel source yields greater amounts of greenhouse gases relative to the amount of heat it yields, compared to other common fuel sources. Further, a variety of substances that can be hazardous to health and the environment are emitted when pet coke is combusted, depending on the type of pet coke used as a source. Those substances include particulate matter, carbon monoxide, carbon dioxide, sulphur dioxide, nitrogen oxides, and heavy metals including mercury, arsenic, chromium, nickel, and cadmium, as well as dioxins, hydrogen chloride, and hydrogen fluoride. If pet coke is burned in a regular furnace or pulverised-coal-fired power plant, the toxic metal and sulphur dioxide emissions are higher than those of coal. US oil firms produce large quantities of pet coke, which is expensive to store. Because of this, those companies are keen to sell their pet coke to energy-hungry developing nations. In doing so, they earn generous profits.

China’s economic growth has undergone an explosion in recent years. But thanks largely to the country’s accompanying industrial growth, pollution of the environment has become an cast, undeniable problem. China’s environmental woes are well-known, as evidenced by the now-famous, seemingly apocalyptic photos from Beijing. In Tiananmen Square, for example, people flock to broadcasts of the sunrise, which is now all but blocked out by thick smog, on huge outdoor TV screens. Adding to these chilling scenes are the people in them, going about their business in masks meant to protect them from the particulate matter borne by the smog. This past December, in fact, China suffered its worst air pollution of the year.

Dozens of Chinese cities released warnings to citizens about pollution reaching dangerous levels. Factories, some power plants, and schools were ordered to close. Recognising the problems pet coke poses, India is considering a nationwide ban on the substance. Citing estimates that eight people die every day – about 3,000 premature deaths in Delhi every year – due to air-pollution-related diseases, the country’s Supreme Court has ordered the government to draft a comprehensive plan to ban pet coke and control air pollution in the capital. The cement industry has expressed concerns about the possible economic impacts of a ban in New Delhi. A recent report listed New Delhi among the worst polluted cities in the world. It also reported that diseases caused by air pollution claim more than a million lives annually in India. Unchecked use of pet coke as a fuel source will only worsen China’s environmental record and further exacerbate global climate change. The same will be true of any country in which use of pet coke as a fuel continues unchecked. Health Effects of Petroleum Coke Significant quantities of fugitive dust from pet coke storage and handling operations present a health risk.

EPA is particularly concerned about particles that are 10 micrometers in diameter or smaller (referred to as PM10) because those are the particles that generally pass through the throat and nose and enter the lungs. Once inhaled, these particles can affect the heart and lungs and cause serious health effects. Therefore, constant monitoring is required of these facilities. For example, in Chicago, the air quality monitoring equipment installed by KCBX Terminals at its north and south facilities continuously measures concentrations of particulate matter 10 micrometers and smaller. Petroleum coke is 90 per cent elemental carbon and 3 per cent to 6 per cent elemental sulphur; the rest is elemental hydrogen, oxygen, and nitrogen.

There are also trace amounts of metals and organic compounds. While trace amounts of toxic materials have been measured in petroleum coke, studies on rats show that petroleum coke itself has a low level of toxicity and that there is no evidence of carcinogenicity. EPA’s research does not suggest that petroleum coke poses a different health risk than PM10. (Source: The United States Environmental Protection Agency) About the author (Jonathan Lyons lives and writes in Central Pennsylvania, USA. He is a futurist and an Affiliate Scholar for the Institute for Ethics and Emerging Technologies).

– Jonathan Lyons

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Price hikes, drop in input costs help cement industry to post positive margins: Care Ratings

Published

3 years ago

October 21, 2021

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Region-wise,the southern region comprises 35% of the total cement capacity, followed by thenorthern, eastern, western and central region comprising 20%, 18%, 14% and 13%of the capacity, respectively.

The cement industry is expected to post positive margins on decent price hikes over the months, falling raw material prices and marked drop in overall production costs, said an analysis of Care Ratings.

Wholesale and retail prices of cement have increased 11.9% and 12.4%, respectively, in the current financial year. As whole prices have remained elevated in most of the markets in the months of FY20, against the corresponding period of the previous year.

Similarly, electricity and fuel cost have declined 11.9% during 9M FY20 due to drop in crude oil prices. Logistics costs, the biggest cost for cement industry, has also dropped 7.7% (selling and distribution) as the Railways extended the benefit of exemption from busy season surcharge. Moreover, the cost of raw materials, too, declined 5.1% given the price of limestone had fallen 11.3% in the same aforementioned period, the analysis said.

According to Care Ratings, though the overall sales revenue has increased only 1.3%, against 16% growth in the year-ago period, the overall expenditure has declined 3.2% which has benefited the industry largely given the moderation in sales.

Even though FY20 has been subdued in terms of production and demand, the fall in cost of production has still supported the cement industry by clocking in positive margins, the rating agency said.

Cement demand is closely linked to the overall economic growth, particularly the housing and infrastructure sector. The cement sector will be seeing a sharp growth in volumes mainly due to increasing demand from affordable housing and other government infrastructure projects like roads, metros, airports, irrigation.

The government’s newly introduced National Infrastructure Pipeline (NIP), with its target of becoming a $5-trillion economy by 2025, is a detailed road map focused on economic revival through infrastructure development.

The NIP covers a gamut of sectors; rural and urban infrastructure and entails investments of Rs.102 lakh crore to be undertaken by the central government, state governments and the private sector. Of the total projects of the NIP, 42% are under implementation while 19% are under development, 31% are at the conceptual stage and 8% are yet to be classified.

The sectors that will be of focus will be roads, railways, power (renewable and conventional), irrigation and urban infrastructure. These sectors together account for 79% of the proposed investments in six years to 2025. Given the government’s thrust on infrastructure creation, it is likely to benefit the cement industry going forward.

Similarly, the Pradhan Mantri Awaas Yojana, aimed at providing affordable housing, will be a strong driver to lift cement demand. Prices have started correcting Q4 FY20 onwards due to revival in demand of the commodity, the agency said in its analysis.

Industry’s sales revenue has grown at a CAGR of 7.3% during FY15-19 but has grown only 1.3% in the current financial year. Tepid demand throughout the country in the first half of the year has led to the contraction of sales revenue. Fall in the total expenditure of cement firms had aided in improving the operating profit and net profit margins of the industry (OPM was 15.2 during 9M FY19 and NPM was 3.1 during 9M FY19). Interest coverage ratio, too, has improved on an overall basis (ICR was 3.3 during 9M FY19).

According to Cement Manufacturers Association, India accounts for over 8% of the overall global installed capacity. Region-wise, the southern region comprises 35% of the total cement capacity, followed by the northern, eastern, western and central region comprising 20%, 18%, 14% and 13% of the capacity, respectively.

Installed capacity of domestic cement makers has increased at a CAGR of 4.9% during FY16-20. Manufacturers have been able to maintain a capacity utilisation rate above 65% in the past quinquennium. In the current financial year due to the prolonged rains in many parts of the country, the capacity utilisation rate has fallen from 70% during FY19 to 66% currently (YTD).

Source:moneycontrol.com

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Wonder Cement shows journey of cement with new campaign

Published

3 years ago

October 21, 2021

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The campaign also marks Wonder Cement being the first ever cement brand to enter the world of IGTV…

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Cement manufacturing company Wonder Cement, has announced the launch of a digital campaign ‘Har Raah Mein Wonder Hai’. The campaign has been designed specifically to run on platforms such as Instagram, Facebook and YouTube.

#HarRaahMeinWonderHai is a one-minute video, designed and conceptualised by its digital media partner Triature Digital Marketing and Technologies Pvt Ltd. The entire journey of the cement brand from leaving the factory, going through various weather conditions and witnessing the beauty of nature and wonders through the way until it reaches the destination i.e., to the consumer is very intriguing and the brand has tried to showcase the same with the film.

Sanjay Joshi, executive director, Wonder Cement, said, "Cement as a product poses a unique marketing challenge. Most consumers will build their homes once and therefore buy cement once in a lifetime. It is critical for a cement company to connect with their consumers emotionally. As a part of our communication strategy, it is our endeavor to reach out to a large audience of this country through digital. Wonder Cement always a pioneer in digital, with the launch of our IGTV campaign #HarRahMeinWonderHai, is the first brand in the cement category to venture into this space. Through this campaign, we have captured the emotional journey of a cement bag through its own perspective and depicted what it takes to lay the foundation of one’s dreams and turn them into reality."

The story begins with a family performing the bhoomi poojan of their new plot. It is the place where they are investing their life-long earnings; and planning to build a dream house for the family and children. The family believes in the tradition of having a ‘perfect shuruaat’ (perfect beginning) for their future dream house. The video later highlights the process of construction and in sequence it is emphasising the value of ‘Perfect Shuruaat’ through the eyes of a cement bag.

Tarun Singh Chauhan, management advisor and brand consultant, Wonder Cement, said, "Our objective with this campaign was to show that the cement produced at the Wonder Cement plant speaks for itself, its quality, trust and most of all perfection. The only way this was possible was to take the perspective of a cement bag and showing its journey of perfection from beginning till the end."

According to the company, the campaign also marks Wonder Cement being the first ever cement brand to enter the world of IGTV. No other brand in this category has created content specific to the platform.

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In spite of company’s optimism, demand weakness in cement is seen in the 4% y-o-y drop in sales volume. (Reuters)

Published

3 years ago

October 21, 2021

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Cost cuts and better realizations save? the ?day ?for ?UltraTech Cement, Updated: 27 Jan 2020, Vatsala Kamat from Live Mint

Lower cost of energy and logistics helped Ebitda per tonne rise by about 29% in Q3
Premiumization of acquired brands, synergistic?operations hold promise for future profit growth Topics

UltraTech Cement
India’s largest cement producer UltraTech Cement Ltd turned out a bittersweet show in the December quarter. A sharp drop in fuel costs and higher realizations helped drive profit growth. But the inherent demand weakness was evident in the sales volumes drop during the quarter.

Better realizations during the December quarter, in spite of the 4% year-on-year volume decline, minimized the pain. Net stand-alone revenue fell by 2.6% to ?9,981.8 crore.

But as pointed out earlier, lower costs on most fronts helped profitability. The chart alongside shows the sharp drop in energy costs led by lower petcoke prices, lower fuel consumption and higher use of green power. Logistics costs, too, fell due to lower railway freight charges and synergies from the acquired assets. These savings helped offset the increase in raw material costs.

The upshot: Q3 Ebitda (earnings before interest, tax, depreciation and amortization) of about ?990 per tonne was 29% higher from a year ago. The jump in profit on a per tonne basis was more or less along expected lines, given the increase in realizations. "Besides, the reduction in net debt by about ?2,000 crore is a key positive," said Binod Modi, analyst at Reliance Securities Ltd.

Graphic by Santosh Sharma/Mint
What also impressed analysts is the nimble-footed integration of the recently merged cement assets of Nathdwara and Century, which was a concern on the Street.

Kunal Shah, analyst (institutional equities) at Yes Securities (India) Ltd, said: "The company has proved its ability of asset integration. Century’s cement assets were ramped up to 79% capacity utilization in December, even as they operated Nathdwara generating an Ebitda of ?1,500 per tonne."

Looks like the demand weakness mirrored in weak sales during the quarter was masked by the deft integration and synergies derived from these acquired assets. This drove UltraTech’s stock up by 2.6% to ?4,643 after the Q3 results were declared on Friday.

Brand transition from Century to UltraTech, which is 55% complete, is likely to touch 80% by September 2020. A report by Jefferies India Pvt. Ltd highlights that the Ebitda per tonne for premium brands is about ?5-10 higher per bag than the average (A cement bag weighs 50kg). Of course, with competition increasing in the arena, it remains to be seen how brand premiumization in the cement industry will pan out. UltraTech Cement scores well among peers here.

However, there are road bumps ahead for the cement sector and for UltraTech. Falling gross domestic product growth, fiscal slippages and lower budgetary allocation to infrastructure sector are making industry houses jittery on growth. Although UltraTech’s management is confident that cement demand is looking up, sustainability and pricing power remains a worry for the near term.