India’s biggest oil company, IOC, is pushing ahead with their plans to introduce an auction system for the sale of their petroleum coke.

The company recently released some bidders’ rules, which include a 5% initial fee, as well as rules as to the quantity and refinery source that bidders can choose from. Floor prices (reserve prices) will be in place for all coke parcels. For those interested, we have a copy of the rules. Contact us for a copy.

The auction will be run by a third-party company called MSTC.

Auctioning pet coke is a brave move. India isn’t exactly a highly liquid market, at least in terms of the number of bidders - or potential bidders. Buyers have long complained about the slowness of the oil companies to respond to market conditions. Witness the amount of calcined coke exported from China to India - sometimes by Indian calcining companies.

An auction system removes the chance of any relationship-building, and it makes me wonder if IOC were worried about getting the best price for their coke. But the law of unintended consequences is likely to apply here. It would be foolish to think that buyers would simply lay down and accept this new system without a fight. We understand at least one calcining company has lodged an appeal with the government.

For more information on what’s going on in the Indian pet coke market, or the primary aluminium industry there, make sure you are subscribed to our “India Report”, which comes out each month.