China's coke industry expands despite price slump

Wednesday, 14 September 2005 12:25:00 (GMT+3)   |  
       

China’s coke industry expands despite price slump

A downturn in coke prices seems to have had little effect on China's coke production and exports, both of which continue to escalate. During the first eight months of 2005, Tianjin Port, which accounts for a great portion of coke exports in China, shipped 7.2 million tons of coke abroad. The total trade value of the exports was $1.44 billion, down 35.4 percent year on year. Meanwhile, coke export at Jiangsu Port doubled year on year to 1.12 million tons through the first eight months. However, the average export price dropped 29.1 percent to $203.8/ton FOB. The coke export price in China fell below $190/ton in July en route to a yearly low of $169.2/ton in August. Based on analysis from experts at Nanjing Customs, expanding export and slumping prices in the Shanxi province coke market arose due to surplus coke supply in the area. Stimulated by the surging price in the first half of 2004, many medium and small-scaled coke enterprises sprung up, and the existing enterprises expanded their productivity. Shanxi province produces 50 percent of China's coke and accounts for 80 percent of the country's total coke exports. In order to prevent coke prices from dropping further, the Shanxi Coke Association organized 93 coke enterprises and asked them to cut their production around 20 to 40 percent from June 2005 onwards. However, the measures have not had a visible impact on coke prices so far. Weakening demand in the international market has been another important reason for the decrease in coke prices. After last year's rush for coke, foreign users have maintained high coke inventory levels this year. Furthermore, over the past two years leading global steelmakers have enhanced their own coking plant expansion and construction in order to lessen their dependence on imported coke. Foreign steelmakers have also been seeking out alternatives to China. The expansion underway in Europe could add 50 million tons to global coke output, while the projects in India will add another 3.4 million tons by 2008.

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