Coke: Capacity Expansion and Production Closure / Restriction Go Side by Side   

With the "self production restriction" and the "closure of small coking enterprises" in the coking sector and the rapid demand increase in downstream metallurgical and chemical sectors, a basic supply/demand balance of coke was achieved in 2006 and the price of coke also made a gradual pickup from the second quarter of 2007. With the impact from the sustained prosperity of the downstream metallurgical sector, the capacity surplus problem in the coking sector was greatly eased in the first half of 2007. Stimulated by the prosperity of downstream sectors and the cost increase in coal sectors, the price of coke had a jump and the overall profit-earning ability in the coking sector was greatly improved.
   In China coke is mainly used as power and raw material in metallurgical and chemical sectors. The upstream sector of the coking sector is the coal mining sector. Coking coal is the basic raw material for the coking sector. Refined coking coal is therefore the main production cost in the coking sector, accounting for around 90% of the total coke production cost. Analysis of the coke consumption proportion in various sectors shows that the consumption proportion of coke in the iron/steel sector increased and it already reached more than 85% in 2005. According to preliminary estimates, the consumption proportion of coke in the iron/steel sector in the total coke consumption was estimated to be around 87% in 2006. The prosperity of the metallurgical sector is therefore an important factor for the coke demand and the coke price.
   According to the estimation by relevant organizations, the total output of coke in China was 280.54 million tons in 2006, an increase of 17.04% over 2005 and the increase was 6.11 percentage points lower than that in 2005. The export amount was 14.50 million tons, an increase of 13.6% over 2005. The amount of coke produced by coking plants in large and medium iron/steel complexes was 91.10 million tons, an increase of 11.28% over 2005. The amount of coke produced by other coking enterprises was 190.11 million tons, an increase of 20.95% over 2005.
    The apparent consumption of coke in China was 266.04 million tons in 2006, an increase of 17.32% over 2005 and the growth in 2005 was 26.35%. The average growth during the Tenth Five-year Plan period (2001-2005) was 16.66%. It was therefore still in the period of high consumption growth. While making a capacity increase of 27.50 million t/a, an outdated capacity of around 15.00 million t/a was eliminated in 2006. In October 2007 the Chinese Government once again published a list of coking units with a total capacity of 10.75 million t/a for elimination.
   According to the survey by China Coking Industry Association, by the end of 2006 China had 871 mechanized coking enterprises and 1 694 mechanized coking furnaces with various specifications and the total capacity reached 313.37 million t/a. Nearly 90 coking furnaces with a total capacity of over 50.00 million t/a are being constructed or planned for construction in 2007 and 2008. Of the total, 48 coking furnaces with a total capacity of over 25.00 million t/a will likely start production in 2007.
   China produced 241.85 million tons of coke from January to September 2007, an increase of 19.4% over 2006. The export amount was 11.73 million tons, an increase of 1.00 million tons. The export price in September already reached US$226 per ton FOB, an increase of around 50% over the average export price in the first half of 2007.