MYSTEEL 2020: China coke price to drop on eased supply
Throughout next year, Mysteel’s price for the quasi-first grade merchant coke with 12.5% ash, 0.65% sulphur and 58%-60% CSR on delivery in Tangshan in North China’s Hebei is expected to hover at Yuan 1,500-2,000/tonne ($214-285/t) including the 13% VAT. During 2019, Tangshan coke prices generally hovered in the Yuan 1,810-2,210/t range, with the average over the 12 months reaching Yuan 1,995.6/t, lower than the average of Yuan 2,233.1/t recorded for 2018, according to Mysteel’s data.
For 2020, Chinese coke production is seen reaching 452 million tonnes, some 10 million tonnes more than the 442 million tonnes estimated for this year. However, according to another Mysteel report, molten iron output next year is forecast to grow by 12 million tonnes, representing another 4.8-6 million tonnes of coke demand which should help to ease the chronic oversupply in coke.
Small ovens targeted for closure
Next year, installed coke-making capacity nationwide will very likely keep growing, despite the central government’s ongoing campaign to eliminate the outmoded and inefficient coking capacity chiefly blamed for creating the industry surplus, Mysteel has forecast. About 33.1 million tonnes/year of new coking operations are expected to commission, while about 19.7 million t/y of excess coking capacity is scheduled to be scrapped during 2020, Mysteel calculated.
As of the end of 2019, China boasted around 550 million tonnes/year of coking capacity, of which 184 million t/y belonged to steelmakers at their works and 366 million t/y was owned by independent coke producers.
Significantly, the chamber height of the coke ovens contributing some 211 million t/y of total coking capacity – a large 38.4% – is 4.3-metres [See the table I]. Ovens of this size, regarded as inefficient and polluting, are the core target of Beijing’s excess capacity elimination campaign.
For 2019, coke supply across China eased somewhat, as by December 19, the average coking capacity utilization rate at the 230 independent coke plants Mysteel surveys weekly was 75.3%, or 1 percentage point higher on year. The average blast furnace capacity utilization rate of the 247 steel mills Mysteel checks nationwide was 0.8 percentage point higher on year as of December 19, according to Mysteel’s data.
For the first eleven months of this year, the growth of domestic coke output has exceeded demand, as total domestic coke production grew 5.9% on year to reach 433.3 million tonnes, which was faster than the 5.1% growth in molten iron production at 738.9 million tonnes over the same period, according to National Bureau of Statistics data.
Exports seen slowing
For 2020, China’s net coke exports are expected to decline, Mysteel predicts, with lower export volume but higher imports forecast – another factor which will weigh on domestic coke prices. Next year, China’s coke exports are expected to decrease to 4 million tonnes while the forecast of coke imports is 1 million tonnes. [See the table II]
China is the world’s largest coke exporter, but over January-November, the country’s coke exports plunged 33.3% on year to reach 5.8 million tonnes. Total exports this year are expected to reach 6.5 million tonnes.
The decline in Chinese coke shipped abroad reflected the decline of steel output globally this year, which reduced the appetite for coke of overseas users, Mysteel noted. Moreover, the subdued global economic growth forecast for 2020 may result in China’s coke exports softening next year.
In contrast, the country’s total coke imports over January-October this year reached around 324,000 tonnes, or nearly a five-fold increase from the first ten months of last year, according to the latest data. China’s overall coke imports this year are estimated to hit 500,000 tonnes, Mysteel forecast.
This year, some steelmakers in coastal areas of Southeast China – attracted by the softening prices of overseas coke – increased their coke imports to partially replace domestic products, Mysteel notes. In view of the anticipated lower global coke price, China’s coke imports may continue to increase next year, Mysteel expected.
Written by Sean Xie, xiepy@mysteel.com
Edited by Russ McCulloch, russ.mcculloch@mysteel.com
Table I:
China’s coking capacity 2019 (unit: million tonnes/year) |
|||||||
Total |
Steel mills |
Independent coking plants |
Dry quenching |
Wet quenching |
Size |
Capacity |
Proportion |
550 |
184 |
366 |
150 |
400 |
Heat recovery |
9 |
1.64% |
4.3-m |
211 |
38.36% |
|||||
5.5-m |
187 |
34% |
|||||
6-m or up |
143 |
26% |
Source: Mysteel
Table II:
Production |
2020 forecast (Unit: million tonnes) |
2019 estimation |
Coke |
452 |
442 |
Import & Export |
/ |
/ |
Coke import |
1 |
0.5 |
Coke export |
4 |
6.5 |
Source: Mysteel
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