Posted on 01 Sep 2020
China, for years the world’s largest exporter of metallurgical coke, became a net coke importer for the first time in more than 20 years, with imports topping exports by about 18,500 tonnes, according to data from the General Administration of Customs (GACC). Analysts ascribed the change to firm domestic demand versus sufficient supply abroad.
China’s coke imports surge while exports decline
During July, China imported some 409,000 tonnes of coke in total, up more than six-fold on year or 86% on month to a record high, while exports touched 390,000 tonnes, down by 19% on year (though up 26% on month), GACC data showed.
Over January-July, the country’s total coke imports were 8.6 times higher on year at 1.2 million tonnes, while exports declined by 50% on year to 2.2 million tonnes. Over the past seven months, Japan was the largest coke exporter to China, with Chinese end-users and traders buying 578,000 tonnes over the period. Japan accounted for half the total import volume from all sources over the seven months.
Table: China’s coke imports and exports
|
|
July (t) |
M-o-M |
Y-o-Y |
Jan-Jul (mln t) |
Y-o-Y |
|
Import |
408,948 |
86% |
6,633% |
1.15 |
8,661% |
|
Export |
390,394 |
26% |
-19% |
2.15 |
-50% |
Source: GACC
By month, China’s coke imports have increased steadily since early this year, while exports for most months this year stayed lower than the same period last year.
Chart: China’s coke import and exports by month
Source: GACC
Firm domestic demand against the tight supply
According to Mysteel’s survey, blast furnace capacity utilization among the 247 Chinese steel mills sampled stayed above 80% over this year’s first seven months, even with the serious impact of COVID-19 over February-March. With the subsequent easing of the pandemic and the recovery of domestic steel demand, the furnace ops rate had continuously refreshed record levels throughout May-July, and as of July 30, had reached a high of 94.5%.
In contrast to the fervent blast furnace operations over the period, capacity utilization among the 230 Chinese independent coking plants Mysteel monitors was kept to below 76%. Impacted by the pandemic, restricted availability of coking coal from domestic miners had forced coking plants to idle operations during Q1. Then in May, East China’s Shandong announced that the local government was strictly controlling the province’s coke output and was cutting the volume by a third from 2019, as reported, a move which served to push up coke prices by around Yuan 300/tonne ($43.5/t).
“The curtailment of coke output in Shandong has been a strong driver for coke imports. Japan is geographically close to China, and owing to the pandemic, that country’s appetite for coke was impacted too, due to lower steel output,” commented a Shanghai-based analyst. The high quality of the Japanese coke also encouraged domestic buyers to buy more coke from Japan, he added.
A steelmaker based in Shandong with several works confirmed that his plant has markedly increased coke procurement this year, with Japan as one of the enterprise’s major coke supply sources.
According to detailed GACC data, China’s coke imports from Japan surged since May, with the total arriving in July reaching 175,000 tonnes, a near seven times increase from April. In July 2019, the volume was too tiny for the GACC to calculate.
Imports growth remains uncertain
Despite the fast growth of coke imports over this year’s first seven months, whether the trend continues for the rest of the year remains uncertain, according to sources.
Other than those in Shandong, domestic coking plants have been operating at a comparatively high level, due to firming coke prices. Capacity ‘swap’ programs – where small, outmoded capacity is scrapped and new facilities are installed in exchange – have progressed well, with the result that more large-sized and advanced coking ovens will commission this year. On the other hand, the elimination of small-sized and inefficient plants will be concentrated at the end of the year, with limited impact on coke supply for 2020, as Mysteel has reported.
Besides, steel production in Japan is recovering, indicating the country’s coke demand will rise too, said another Shanghai-based analyst, with shipments to China dropping as a consequence.
Japan Iron & Steel Federation data released on August 21 showed that while total crude steel output production by blast furnace mills in July was lower by 32.6% on year at 4.41 million tonnes, the total was actually higher by a strong 8.4% from June, as reported.
“Although Japanese steel production was still much lower than the same period last year, its steel output has shown signs of recovery,” the Shanghai analyst explained.
In China, domestic coke supply has tightened because of the prolonged strength of steel production, commented a Zhejiang-based analyst. If blast furnace operations start to retreat from the high, coke demand will slide too, he warned.
Written by Sean Xie, xiepy@mysteel.com
Edited by Russ McCulloch, russ.mcculloch@mysteel.com
Source:Mysteel Global
