Coke market braces for Shanxi’s new anti-pollution blitz
Commencing July 1, Shanxi’s provincial Department of Ecology and Environment is despatching eleven inspection teams to visit industrial enterprises in the province’s eleven major cities over the coming 100 days to check on pollution-related matters including the status of pollution abatement facilities, according to a release by the department on June 29. All industries will be covered but coke-making is the one of the primary targets.
As Mysteel reported in May, China’s Ministry of Ecology and Environment (MEE) in Beijing charged that local government authorities in the Shanxi cities of Linfen, Changzhi, Jinzhong, Datong and Lvliang and in the provincial capital of Taiyuan had not fulfilled their obligation to reduce pollution, particularly in relation to Shanxi’s coking industry – a very public and high-level rebuke that at the time led many coke-market watchers to envisage production cuts while problems were rectified.
The Shanxi provincial government was ordered to submit a plan to China’s state council by mid-June spelling out how it proposed to improve air quality. Though no plan was publicly released, market watchers say Monday’s despatch of the teams appears to be Shanxi obeying the central government’s directive in the country’s ongoing battle with pollution.
In Saturday’s release, Shanxi’s provincial ecology department gave no specific date for when the inspection visits would end. However, Mysteel notes that calculated on the stated 100-day duration of the campaign, the inspections should be completed by early October – which coincidently overlaps with celebrations to mark the 70th anniversary of the foundation of People’s Republic of China on October 1 (celebrations which Beijing would not like to see literally clouded by pollution issues).
Ahead of the checks by the provincial authority, those industries in Shanxi whose emissions of pollutants are regarded as significant had been ordered by the provincial environment department to undergo self-checks through June, the department notes.
Shanxi is China’s largest coke-making centre, whose clients cover traders and steelmakers across North and East China, Mysteel Global notes. During 2018, Shanxi produced 92.6 million tonnes of coke, accounting for 21% of China’s total, according to the country’s National Bureau of Statistics.
“The upcoming environmental checks may lead to restrictions on coke production being tightened in Shanxi – though we can’t guess yet how much capacity might be influenced,” a South China-based analyst commented. Importantly, back in May some city authorities in Shanxi had announced measures to restrain coke production to fight air pollution yet there was no major reduction in local coke supply.
According to Mysteel’s survey, the coking capacity utilization rate of the 42 independent coke plants in North China, of which most are in Shanxi, has been hovering around 80% since early May, which was even slightly higher than that over March-April.
However, some market participants remain undecided on whether the provincial government inspection blitz will have an impact on actual production. “We may need a period of time to monitor the impact of the new checks, because as of now – the very first day – we’ve heard nothing about any adjustment being made to (coke) production from the existing restrictions on local coke capacities,” said a Shanxi-based market watcher.
As Mysteel has reported, in May several city governments in the province including Linfen announced their own local environment measures aimed at improving air quality in their municipalities, including to close some coke plants with heavy pollution.
Written by Sean Xie, xiepy@mysteel.com
Edited by Russ McCulloch, russ.mcculloch@mysteel.com
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