Posted on 10 Jun 2021
Coke market participants are closely monitoring what measures government authorities in East China’s Shandong might adopt to keep the province’s coke output under control, as part of the province’s work to rein in coal consumption.
According to a recent document circulating in the market from Shandong’s Department of Industry and Information Technology and Development and Reform Commission, the province has started to collect information from coke makers under its jurisdiction regarding their coke production over January-May, plus their coal consumption over the same period and destination of their products.
Those coke makers whose output over January-May is found to have exceeded 45% of their full-year quota for 2020 (allocated to makers by Shandong’s provincial authorities in May 2020), will be ordered to either cut production or suspend operations, according to the document.
To curtail coal consumption, Shandong, once a leading coking hub in China, had started applying stringent controls on coke production from May 2020, Mysteel Global had reported. The government had announced it would cap the province’s coke production at 32 million tonnes for 2020 and had mandated a maximum output volume last year for each coke plant.
For 2020, the province’s actual coke production slumped 32% on year to 31.6 million tonnes, according to data from the National Bureau of Statistics. The year before, Shandong had been China’s third-largest coking base – after North China’s Shanxi and Hebei – but because of the sharp decline last year, Shandong’s volume was also topped by output from North China’s Inner Mongolia and Northwest China’s Shaanxi.
Over this year’s January-April period, Shandong’s coke output dropped 9.5% on year to 11.1 million tonnes, NBS data showed.
“It is still unclear whether the recent document could have a material impact on Shandong’s coke production,” said a source familiar with Shandong’s coke market. Apart from those at several plants, operations of most coke producers in Shandong are staying as per normal.
The renewed speculation about coke output controls again in Shandong has prompted some traders to return to the market for coke procurement, said an industrial source in Shanxi. “We’re seeing more bookings (from Shanxi) destined for Shandong,” she said.
As for demand, coke deliveries to the leading steel mills of Shandong are generally stable, a Shanghai-based market watcher observed, and the coke inventories the mills are holding are at a medium-level.
As of June 8, Mysteel’s composite coke price for East China had dropped Yuan 21.6/t ($3.4/t) on week to Yuan 2,701.9/t including the 13% VAT.
Source:Mysteel Global
