Jin-Jiao Coordination: Guiding Opinions on Issues Related to the Coke Market in March 2009

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The Shanxi Coking Industry Association reduced the guideline price for coke for the first time after the New Year’s holiday, by 150 yuan per ton. Just one month after the province raised the price of coke by 80 yuan per ton in February, on March 15th, reporters learned from the Shanxi Coking Industry Association that the guideline price for coke dropped by 150 yuan per ton in March. Based on the criteria of a sulfur content of 0.7 or less and an ash content of 12.5 or less, the price per ton of coke will be reduced by 150 yuan per ton starting from March 1, based on the February price of 1,850 yuan per ton inclusive of taxes for delivery at the plant (and 1,830 yuan per ton in cash terms, also including taxes). 　　It is reported that in January 2009, as the market generally expected a recovery in the coking industry, the Coking Industry Association of Shanxi Province set the tax-inclusive guideline price for coking coal at 1,750 yuan per ton. By February, market demand increased, and in order to reduce losses, the Shanxi Coking Association raised the price of coke by another 1,850 yuan per ton. But just one month later, the steel and coking industries faced difficulties again; as a result, the Shanxi Coking Association reduced the price per ton of coke by 150 yuan, bringing the price to 1,700 yuan per ton. At the same time, production restrictions were increased, with production being limited to 60% to 70% of normal levels. 　　“Before January, coking plants reduced production by 60% to 70%. In February, the Shanxi Coke Association suggested that the reduction level could be brought back to 40% to 50%, but in March, the production cut increased again to 60% to 70%. Given the current situation, companies that are in a position to do so will continue to shut down their production facilities. ”Xu Liang, a responsible official from Shanxi Guxian Baofeng Coking Co., Ltd., said. 　　Additionally, a supervisor from the sales department of Shanxi Coking Plant told reporters, “Recently, the price of coke in some areas within the province has been driven down again to very low levels, with excessive price cuts disrupting the market.” ”To this end, the guiding principles also state that price-cutting among coking enterprises to disrupt the market is strictly prohibited, in order to maintain stability in the coking market. 　　Recently, the high prices of coking coal have led to an inversion in the costs associated with coke production. The Coking Association has also proposed carrying out centralized joint purchases of coking coal in order to reduce procurement costs and ensure a stable supply of coal. 　　Furthermore, regarding the issue of market segmentation and the allocation of supply sources, the Coking Enterprises Alliance of Shanxi Province suggests that the Hebei market should be managed by the Coking Industry Association of Shanxi Province and the Coking Industry Association of Hebei Province, with the support of Inner Mongolia and Shaanxi. The Shandong market is primarily 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 Shanxi Coking Enterprises Alliance. Source: Shanxi Youth News. Jinjiao Association: Guiding Opinions on Issues Related to the Coke Market in March 2009. Guiding Opinions on Issues Related to the Coke Market in March 2009 – To all member units and coking enterprises:
Given the difficult conditions currently faced by the steel and coking industries, 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, 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 results from market research, the association hereby presents guiding opinions on issues related to the current coke market. 　　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 coking coal flow and severe payment delays. 　　2. Regarding coke quality and price. The key quality indicators 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 February price of 1,850 yuan per ton for the delivered product including taxes (and 1,830 yuan per ton for cash payment including taxes). 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 drive down prices among each other and disrupt the market, in order to maintain stability in the coke market. Regional guide prices for the alliance area (in yuan per ton): Key parameters – In Beijing and Tianjin, the price is 1700 (price including taxes and upon acceptance); ash content ≤ 12.5%, sulfur content ≤ 0.7%. In Tangshan, Hebei, the price is also 1700 (price including taxes and upon acceptance); ash content ≤ 12.5%, sulfur content ≤ 0.7%. In Handan and Xingtai, Hebei, the price is 1750 (price including taxes upon delivery); ash content ≤ 12.5%, sulfur content ≤ 0.7%. In Jinan and Zibo, Shandong, the price is 1750 (price including taxes upon delivery); ash content ≤ 12.5%, sulfur content ≤ 0.7%. In Qingdao and Rizhao, Shandong, the price is 1780 (price including taxes upon delivery); ash content ≤ 12.5%, sulfur content ≤ 0.7%. In the East and South China regions, prices are determined based on delivery distance and other parameters, 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, distribution 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 primarily 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 urge all enterprises to 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. This post was last edited by I’m awesome on 2009-3-16 14:59 ]