Shanxi Association plans to lower coke reference price
Saturday, 17 Oct 2009
It is reported that in October Shanxi Coke Industry Association has decided to further lower the reference price of coke by CNY 80 per tonne to CNY 1,700 per tonne after September cut of CNY 100 per tonne. As a result, the price of coke has come to where it was in this June and July. Among the four enterprises that have issued Q3 operation, three were in red. All these tell people that the recovery of the coke industry has been nothing more than a flash in a pan.
Back in late April, the association raised the reference price for the coming May by CNY 30 per tonne to CNY 60 per tonne according to different regions, while in the price for Mar and April was lowered by CNY 250 per tonne. And the reference prices in the following May, June and July all went up convincing people that the industry has stepped onto a journey of ongoing recovery. In early August however, the steel price witnessed a sharp turn around and then headed down, leading the price of coke to go down too by CNY 100 per tonne in September.
The recovery started from this June has now waned. In spite of the downgrade of the coke market, the price of coking coal has obviously been numb to go down. As Shanxi province is going through an integration of coal mines now, the production of most small mines will not be resumed until after November. The supply of high grade coking coal has been tight, and the coal mines disaster has also resulted in the tightness, thereby pushing up the price of coking coal.
In the meantime, all coke plants are requested by the association to lay up 60% to 70% of capacities up in October so as to stabilize market supply reduce stock of both coal and coke.
The surplus of the capacity of coke remains to be the main cause of the gloomy coke market. China’s coke capacity has reached 380 million tonnes per year but the economic recession has left China coke industry with negative growth in since 2008, for the first time since 1999. According to the estimate of China Coke Industry Association, demand of China demand is likely to decline further, for example by 280 million tonnes to 290 million tonnes. If this is the case, 100 million tonnes of coke will be in surplus this year.
