Chinese Coke Demand Seen At 280 Million Tonnes

According to Mr Huang Jingan chairman of the China Coking Industry Association, Chinese coke demand is expected to reach no more than 280 to 290 million tonnes this year in view of a predicted decrease of 430 to 460 million tonnes in crude steel production by China Iron and Steel Association.

Hammered by plummeting steel price in the second half of last year, domestic mills started to cut output from October, shrinking the demand for coke. Meanwhile, purchases from overseas markets also declined. Moreover, the coke export tariff was raised to 40%, directly causing annual exports to dive by 20.72% YoY to 12.13 million tonnes in 2008. In the first two months of 2009, China exported 100,000 tons of coke, plunging 93.9% YoY.

Both bleak demand and suffocated exports force coking enterprises to trim production which has plunged after recording a daily high at 1.03 million tonnes in last June. During last September and December China yielded 91.23 million tonnes tumbling 20.59% YoY. The total coke output is expected to drop 8.5 million tonnes or 2.54% YoY to 327 million tonnes, the first drop since 1999.

In Mr Huang's eye, the coke industry will continue to struggle with contracting demand, over capacity and oversupply in 2009.

Data shows that domestic crude steel production edged up by 2.4% in the first two months while steel and coke exports slid 52% and 6.3% respectively.

On the contrary, domestic coke production capacity coninues to grow. Over 30 million tonnes of capacity was on stream in 2008 while another 7 million tonnes was delayed by the depressed market. Besides, more and more large- or medium-sized coking enterprises accelerated completing manufactory sets and expand production capacity this year, swelling potential capacity to around 50 million tonnes.

Mr Huang said despite short recovery of crude steel production in February and March, CISA still lowered its prediction of annual steel output to 430 to 460 million tonnes down by 8% to 15%, which accordingly makes 2009 coke demand 280 to 290 million tonnes at the most.

Source: Steel Guru