Shanghai Securities News cites Mr Huang Jingan, chairman of China Coking Industry Association, in response to the reviving coking industry in May and June as saying that market risks are still worth attention in the second half of 2009 against a backdrop of overcapacity.
Mr Huang said "Although steel price has climbed and coke price has increased, the whole coking industry still suffer losses. Only some independent coking enterprises can gain profits.”
He pointed out that “Boosted by the country 4 trillion stimulus package outputs of steel and coke in this year may break 500 million tonnes and 300 million tonnes respectively. However, total capacities record over 600 million tonnes and 400 million tonnes respectively. More than expected output growth will knock down product price hence total output needs to be restricted.”
Mr Huang said “Besides loan increment in the H1 of this year has exceeded full year target. Uncertainties exist for credit scale and then steel and coke markets in the H2. Shrinking worldwide demand indicates exports of steel products, coke and related chemical products can hardly turn better.”
He added that “Given tight supply and high price of coking coal, domestic enterprises have to import coking coal. Statistics show the country coking coal imports surged 3.4 times to 12.8 million tonnes in H1. Although coking coal imports have slowed down, total imports in this year is still likely to surpass 20 million tonnes.”
Mr Huang criticized that despite existing overcapacity, some furnaces are still expanding capacities buoyed by local governments' philosophy that investment will boost economic development. He said that "Some projects under planning are 5 million tonne grade or even 10 million tonnes grade production bases. These fresh capacities, especially blind expansion without targeted stable market, are of high market risks."
Source: Steel Guru/Shanghai Securities News
No comments:
Post a Comment