According to Mr Huang Jingan director general of China Coking Industry Association at an industry forum coke prices at home and abroad both go downward as demand from steelmakers shrinks. Many producers cut outputs while some others undersell the product. Profit rate in the industry will drop sharply.

 

He said that coke industry has been falling since a record-high output of 1.04 million tonnes in this June. Due to Beijing Olympics and worldwide economic downturn, China's steel output growth in July decreased, knocking down coke output to 970,000 tonnes in the month and further to 957,000 tonnes in August.

 

Mr Huang said some small producers have been pressed to halt production, while some big producers halve outputs. He said that "Figures in July and August indicate coke output is dropping consecutively. He added that output has fallen sharply in early October.

 

Mr Huang said that "As steel market in China and the world suffers great pressure, almost all coking plants in China now reduce output and coke price keeps sagging. He said that price usually stays at some CNY 3000 per tonne for second grade coke and CNY 3200 per tonne or even CNY 3400 per tonne for first-grade coke. But now price has tumbled by CNY 1000 per tonne to CNY 2000 per tonne for second-grade coke. He added that some traders seldom buy coke resources as a result of difficult steel sales. But he also pointed out current prices were not normal price.”

 

Mr Huang said that "No producers can gain profits at coke price level in recent weeks. He said that current price could only maintain production regardless of cost and would not last long. He believed coke market would hover on a high track due to growing demand and high coking coal cost. He added that in international market coke is quoted at USD 580 per tonne to USD 600 per tonne, diving significantly from previous record of USD 720 per tonne. Besides, even this price can not promote sales."

 

Mr Huang estimated that China's coke export volume would reach 12 million tonnes to 13 million tonnes this year compared with 15 million tonnes in 2007. He also forecasted in the long term export volume would maintain current level rather than jump or drop notably. He added that rapid growth of China's coke industry has gone. Output growth is expected to stay below 10% this year and 4% to 5% in the coming years.

 

(Source: Shanghai Securities News)

 

 

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