The economy is getting colder and colder
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Coke prices have now dropped back to 1,550 yuan per ton, and it’s still difficult to sell it; the recovery of the steel industry seems far off. Most companies are losing money; the 8% growth this year seems to be the Chinese tradition of reporting only good news and hiding the bad. The economy in Baoding is currently experiencing negative growth, with companies operating at less than full capacity. Is it possible for the economy not to decline? The situation isn’t good, so spending should be kept in check; maybe salaries will even be reduced one day. How much longer will this situation last? Will things really get better by the end of the year? Oh my God, China produces way too much steel and coke – there’s an excess of it. With a poor economy, it’s we who suffer as a result. . . . . Mandatory savings start now; the monthly living expenses must not exceed 500 yuan.
You guys are doing okay – your salaries haven’t been reduced, but we didn’t get any bonuses at the start of this year. It’s unknown how much longer the financial crisis will continue.
Due to production restrictions, we have been paying 80% of the salary since March.
Document of the Shanxi Coking Enterprises Alliance, Jinjiao Alliance Secretarial Document No. (2009) 3: Guiding Opinions on Issues Related to the Coke Market in March 2009
To all member units and coking enterprises:
Given the challenging conditions in both the steel and coking industries at present, and in order to maintain the basic survival conditions of coking enterprises and provide better long-term support for the development of the steel industry, the alliance hereby offers guiding opinions on issues related to the current coke market, based on the changes in the coke market during the previous period, as well as recent trends in the coke, steel, and coal markets and the results of market research. 1. Strictly implement production and transportation restrictions. Increase the production cut to 60%–70%, and where possible, shut down the furnaces completely ； Transport is restricted for customers with poor coke flow and severe payment delays. 2. Regarding coke quality and price. The main quality criteria for coke are based on the standards of sulfur content below 0.7 and ash content below 12.5 ； Starting from March 1, the price of coke decreased by 150 yuan per ton, based on a price of 1,850 yuan/ton for delivery with taxes included in February (and 1,830 yuan/ton for cash payment with taxes included). Each enterprise should determine the contract prices by referring to the guideline prices in the alliance area, taking into account factors such as the quality of its own coke, its relationship with customers, and market demand conditions. It is strictly prohibited for coking enterprises to undercut each other in order to disrupt the market, and efforts must be made to maintain stability in the coke market. Guided prices for the alliance region: Region, Price (yuan/ton), Key specifications. Beijing and Tianjin areas: 1700 (price including tax upon delivery); ash content ≤ 12.5%, sulfur content ≤ 0.7%. Tangshan, Hebei area: 1700 (price including tax upon delivery); ash content ≤ 12.5%, sulfur content ≤ 0.7%. Handan and Xingtai, Hebei areas: 1750 (price including tax upon delivery); ash content ≤ 12.5%, sulfur content ≤ 0.7%. 1650 (price including tax upon delivery); ash content ≤ 13.5%, sulfur content ≤ 0.8%. Jinan and Zibo, Shandong areas: 1750 (price including tax upon delivery); ash content ≤ 12.5%, sulfur content ≤ 0.7%. 1650 (price including tax upon delivery); ash content ≤ 13.5%, sulfur content ≤ 0.8%. Qingdao and Rizhao, Shandong areas: 1780 (price including tax upon delivery); ash content ≤ 12.5%, sulfur content ≤ 0.7%. 1680 (price including tax upon delivery); ash content ≤ 13.5%, sulfur content ≤ 0.8%. East and South China regions: Prices are determined based on delivery distance and specifications, with reference to the above rates. 3. For steel companies that deliberately delay payment to coking enterprises, fail to sign contracts, set arbitrary prices, have harsh contract terms, impose excessive penalties, or have a poor reputation, it is recommended that coking enterprises refuse to deliver goods to such companies in order to minimize losses and unpaid debts. 4. Market segmentation, allocation of supply sources. The Hebei market is under the responsibility of the Shanxi Coking Industry Association and the Hebei Coking Industry Association, with support from Inner Mongolia and Shaanxi ； The Shandong market is mainly managed by the Shandong Coking Industry Association, with support from Shanxi, Hebei, and Shaanxi ； The East China and South China markets are coordinated uniformly by the alliance. 5. Given the persistently high prices of coking coal and the inverse relationship between coke costs and coal prices, the alliance proposes adopting a centralized joint procurement approach to reduce procurement costs, ensure a stable supply of coal, and promote the sustainable development of the coking industry. We hope that all enterprises will provide active support and cooperation, as well as offer reasonable suggestions. Companies should continue to strengthen communication with their steel industry clients, reach a consensus, and work together to overcome difficulties. And consciously abide by it, supervise each other, and enforce it strictly. March 13, 2009. This post was last edited by ryn on 2009-3-15 11:47.]
To all member units and coking enterprises:
Given the challenging conditions in both the steel and coking industries at present, and in order to maintain the basic survival conditions of coking enterprises and provide better long-term support for the development of the steel industry, the alliance hereby offers guiding opinions on issues related to the current coke market, based on the changes in the coke market during the previous period, as well as recent trends in the coke, steel, and coal markets and the results of market research. 1. Strictly implement production and transportation restrictions. Increase the production cut to 60%–70%, and where possible, shut down the furnaces completely ； Transport is restricted for customers with poor coke flow and severe payment delays. 2. Regarding coke quality and price. The main quality criteria for coke are based on the standards of sulfur content below 0.7 and ash content below 12.5 ； Starting from March 1, the price of coke decreased by 150 yuan per ton, based on a price of 1,850 yuan/ton for delivery with taxes included in February (and 1,830 yuan/ton for cash payment with taxes included). Each enterprise should determine the contract prices by referring to the guideline prices in the alliance area, taking into account factors such as the quality of its own coke, its relationship with customers, and market demand conditions. It is strictly prohibited for coking enterprises to undercut each other in order to disrupt the market, and efforts must be made to maintain stability in the coke market. Guided prices for the alliance region: Region, Price (yuan/ton), Key specifications. Beijing and Tianjin areas: 1700 (price including tax upon delivery); ash content ≤ 12.5%, sulfur content ≤ 0.7%. Tangshan, Hebei area: 1700 (price including tax upon delivery); ash content ≤ 12.5%, sulfur content ≤ 0.7%. Handan and Xingtai, Hebei areas: 1750 (price including tax upon delivery); ash content ≤ 12.5%, sulfur content ≤ 0.7%. 1650 (price including tax upon delivery); ash content ≤ 13.5%, sulfur content ≤ 0.8%. Jinan and Zibo, Shandong areas: 1750 (price including tax upon delivery); ash content ≤ 12.5%, sulfur content ≤ 0.7%. 1650 (price including tax upon delivery); ash content ≤ 13.5%, sulfur content ≤ 0.8%. Qingdao and Rizhao, Shandong areas: 1780 (price including tax upon delivery); ash content ≤ 12.5%, sulfur content ≤ 0.7%. 1680 (price including tax upon delivery); ash content ≤ 13.5%, sulfur content ≤ 0.8%. East and South China regions: Prices are determined based on delivery distance and specifications, with reference to the above rates. 3. For steel companies that deliberately delay payment to coking enterprises, fail to sign contracts, set arbitrary prices, have harsh contract terms, impose excessive penalties, or have a poor reputation, it is recommended that coking enterprises refuse to deliver goods to such companies in order to minimize losses and unpaid debts. 4. Market segmentation, allocation of supply sources. The Hebei market is under the responsibility of the Shanxi Coking Industry Association and the Hebei Coking Industry Association, with support from Inner Mongolia and Shaanxi ； The Shandong market is mainly managed by the Shandong Coking Industry Association, with support from Shanxi, Hebei, and Shaanxi ； The East China and South China markets are coordinated uniformly by the alliance. 5. Given the persistently high prices of coking coal and the inverse relationship between coke costs and coal prices, the alliance proposes adopting a centralized joint procurement approach to reduce procurement costs, ensure a stable supply of coal, and promote the sustainable development of the coking industry. We hope that all enterprises will provide active support and cooperation, as well as offer reasonable suggestions. Companies should continue to strengthen communication with their steel industry clients, reach a consensus, and work together to overcome difficulties. And consciously abide by it, supervise each other, and enforce it strictly. March 13, 2009. This post was last edited by ryn on 2009-3-15 11:47.]
The known price is just that – there’s no change; steel mills have once again reduced production, which has led to an excess of coke. The current price is at least 150 yuan lower than their estimated price
Fortunately, although our company’s coke production is limited, sales are still good! It’s the low price point – for each ton of coke, there’s a loss of over 200. It’s even more costly not to produce!
Apart from the poor macroeconomic conditions, coke is originally a raw material for the steel industry; coking enterprises should form a circular economy with steel enterprises in order to achieve the highest economic benefits and make the best use of resources. In the long term, and given the fact that steel companies have been investing heavily in coking projects in recent years, this is not good news for independent coking enterprises. Coking enterprises can achieve good economic benefits only by strengthening technological innovation and extending their industrial chains.
With these market conditions, coal prices remain high.
We have to consider the issue of production limits again. I also can’t understand the problem on the 9th floor – why can coal prices remain so stable??
Life isn’t easy these days; it’s really necessary to be frugal and cut back on spending.