In the first half of 2007, China's coking industry continued to show a trend of structural adjustment, technological advancement, strong demand, and rapid growth in production and consumption. However, as macroeconomic regulatory measures became more evident in the second half of the year, concerns over declining steel exports and increased operational uncertainties began to surface. According to Jin Qiang, president of the China Coking Industry Association, these factors have raised risks in the coke market, making it a critical period for the industry.
The first half of the year witnessed a significant increase in both production and demand. The rapid development of industries such as iron and steel metallurgy, chemicals, non-ferrous metals, and machinery manufacturing drove up coke production. From January to June, crude steel and pig iron output in China rose by 18.92% and 16.84%, respectively. Coke consumption in ferroalloy and calcium carbide industries also surged by 35.33% and 24.13%. Meanwhile, the foundry coke industry saw a 32.15% increase in production. These trends pushed daily coke production from 775,400 tons in January to 963,000 tons in June—an increase of nearly 190,000 tons.
Coking coal enterprises above designated size produced 158.81 million tons of coke in the first half, up by 21.0% year-on-year. Domestic coke consumption reached 148.76 million tons, an increase of 21.54%. Exports also rose, with 8.05 million tons of coke exported—up 22.4% compared to the previous year. This indicates growing demand both domestically and internationally.
Despite the rise in production, the industry faced challenges. The average price of coke greater than 40mm reached 1,245 yuan/ton in June, up 100 yuan/ton from January. While coking companies achieved a profit of 4.033 billion yuan from January to May, the average profit per ton was only 25.72 yuan. Moreover, 32.68% of enterprises remained unprofitable.
New production capacity also expanded rapidly. Several projects that had been delayed were now under construction, and large-scale steel complexes accelerated their coke oven developments. As a result, new production capacity increased significantly, leading to potential overcapacity and supply-demand imbalances.
In the first half of 2007, coke output grew by 21% year-on-year, outpacing the 17.88% growth in pig iron production. However, by June, the growth rate of coke production dropped to 18.4%, while pig iron growth fell to 13.68%, widening the gap. According to the China Iron and Steel Association, domestic steel consumption is expected to reach 446 million tons, and crude steel output could hit 480 million tons in 2007, reflecting strong industrial momentum.
Meanwhile, raw coal production rose by 11.4% year-on-year, but coal exports fell by 21.8%, with coking coal exports dropping by 31.85%. To meet domestic demand, coking coal imports increased by 18.03% in the first half of the year.
On the export front, the government raised the coke export tariff from 5% to 15% starting June 1, prompting exporters to accelerate shipments. In May, exports reached 1.61 million tons, but dropped to 1.3 million tons in June. With the higher tax, export costs increased by about $16/ton, though many contracts had already accounted for the tax increase.
To ensure sustainable development, the industry must focus on several key areas: controlling output, eliminating outdated capacity, optimizing the industrial structure, and strengthening upstream and downstream integration. Additionally, coking companies should prioritize energy efficiency, pollution control, and environmental protection, aligning with national policies for a harmonious society.
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