The coking industry is showing a stable and positive trend, with the supply and demand situation gradually improving

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Since the beginning of this year, as the structural reforms on the supply side have progressed, the coking industry has shown an overall development trend of declining volumes and rising prices, while remaining stable and improving. It is mainly characterized by the following features: first, coke production continues to decline. Affected by factors such as declining demand from end-users and environmental regulations, the total national coke production from January to October was 359.53 million tons, a decrease of 1.0% on a year-on-year basis. Of this amount, 91 million tons were produced by integrated steel coking enterprises, representing a decline of 4.9%, while 268.53 million tons were produced by other coking enterprises, with a slight decrease of 0.2%. It is estimated that China’s coke production will reach around 430 million tons in 2018. Second, coke prices have been fluctuating upward. Since the beginning of this year, the supply and demand situation in the coal, coking coal, and steel markets has tended to be balanced. With coal and steel prices remaining relatively high, coking coal prices have fluctuated at high levels. From January to October, the average price of secondary metallurgical coke was 2,047 yuan per ton, up 13.2% on a year-on-year basis. Starting in May, coke prices reversed their downward trend, experiencing a rebound and moving upward in an oscillating manner. Third, both the volume and price of coke exports have increased. From January to October, China’s total coke exports amounted to 7.76 million tons, a 27.6% increase on a year-on-year basis; the export value was 15.25 billion yuan, up 41.8% year-on-year; the average export price was 1,965 yuan per ton, representing a 11.0% increase compared to the previous year. Coke exports are expected to reach around 9 million tons for the whole year. Fourth, the prices of coke by-products vary. According to estimates by the China Coking Industry Association, from January to October, the production of coal tar, a major by-product of coking, was 14.35 million tons, a 1.0% decline on a year-on-year basis; the production of crude benzene was 3.78 million tons, also showing a 1.0% decline. Due to declining production and increasing demand for coal tar pitch in downstream industries, the average price of coal tar was 3,282 yuan per ton, up 20.9% on a year-on-year basis; affected by falling international crude oil prices and a downward trend in the pure benzene market, the average price of crude benzene was 5,002 yuan per ton, down 1.9% year-on-year. Due to its unique national conditions, independent coking accounts for a high proportion in our country; the coke produced by independent coking plants makes up about 66% of the total coke production. The competitiveness of independent coking enterprises lies mainly in the deep processing of by-products during the coke production process and the comprehensive utilization of coke oven gas. However, increasingly strict environmental standards, such as those regarding dry quenching of coke and the desulfurization and denitrification of flue gases, pose challenges to the development of the coking industry, especially that of independent coking enterprises. With increasing environmental regulations, some companies can no longer cope with the pressure. The total production capacity of the coking industry is 670 million tons, but it is practically impossible to equip coke ovens with dry quenching systems for those with a height of less than 5 meters. Although there are no regulatory requirements forcing the elimination of coke ovens with a height of less than 4.3 meters, many companies have already voluntarily phased them out. Preliminary estimates suggest that coke ovens under 4.3 meters account for approximately 30-40% of the total. As concerns over nitrogen oxide emissions from coking have increased, it is expected that many regions will gradually restrict the expansion of new coking capacity in the future. Many areas are no longer approving new coking plants, and we believe that the development of related industries could be promoted through equivalent substitution; as a result, the supply and demand situation for coking is likely to improve over time. Source: Qianzhan Industry Research Institute