The average coking capacity utilization rate at the 230 independent coking plants Mysteel monitors was at a four-month high of 75.48% as of October 7, according to Mysteel’s latest survey on October 8. Survey respondents said that some coke makers quietly lifted production after becoming aware that checks by central and local authorities of their environmental protection facilities were eased over the October 1-7 National Day holidays.
Compared with utilization rate on September 27 just prior to the holidays, Sunday’s result was 1.5 percentage points higher. Moreover, the daily coke output of the 230 plants edged up by another 2% (equivalent to 13,500 tonnes/day) over the September 28-October 7 week to 678,400 t/d, the survey showed.
“Major coke makers in China are gradually getting used to the emergency environmental restriction measures since the central government began the second round of inspections under its ‘Blue Sky Safeguard’ scheme,” a Shanghai-based analyst explained. This round spans August 20-November 11, Mysteel notes.
Coke capacity utilization will readily increase if the visits of inspection teams are not so frequent, the analyst explained, adding that the coke-makers stepping up output is likely to continue until the next major inspection blitz or there’s a change of policy regarding restricting output for pollution control.
Also as of October 7, coke stocks at the 110 steel plants nationwide Mysteel audits reached a two-month high at 4.31 million tonnes, 3.4% or 141,800 tonnes higher than stock levels on September 27, according to a parallel survey published on October 8. The stocks could meet the mills’ needs for 13.69 days of operations, some 3.7% higher from the previous survey.
The volume of coke delivered to steel plants over the National Day holiday remained high as coke demand was strong over the holiday because most steelmakers continued to produce as normal, a second analyst in Shanghai said. “The reason that some steelmakers are keeping medium to high levels of coke stocks may be that they are preparing sufficient reserves of the raw material for fear of possible disruptions to transportation if additional environmental measures are implemented in the future,” he said. Chinese authorities have targeted heavy trucks delivering commodities such as coal and coke for causing diesel smog.
The increase in coke stocks at steel plants has led Chinese coke prices to drop further. For example, the offer price of merchant coke with 12.5% ash and 0.7% sulphur in Lvliang, North China’s Shanxi, declined by Yuan 100/t ($14.5/t) to the last trading day on the pre-holiday week on September 30 to Yuan 2,270/t, or a seven-week low, according to Mysteel’s data.
Written by Sean Xie, xiepy@mysteel.com
Edited by Russ McCulloch, russ.mcculloch@mysteel.com