Coking industry ★★★★★★ Is the future uncertain? The industry is in danger! ! !
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Recently, the three major coke-producing provinces of Shanxi, Shandong, and Hebei have successively announced the guideline prices for the coke industry and the production cut levels for April. Due to the downturn in the downstream steel industry, steel mills have increased production cuts. The three provinces independently raised the production cut level to over 50% once again. According to the \"Guidelines on the Coke Market for April 2009\" issued by the Coking Industry Association of Shanxi Province, the production cut imposed on coking enterprises in Shanxi Province was reduced from 50% in March to 60%–70%. Additionally, according to information from the Shandong Coking Industry Association and the Hebei Coking Industry Association, production restrictions have been lifted to 50–60% and over 50%, respectively. This means that almost half of our country’s coking capacity will be unable to be utilized. Several industry insiders say that with coke prices continuing to fall, there is a loss of around 100 yuan per ton at present, and within two months, a large number of coke manufacturers will shut down. There is still room for a further decrease of 100 yuan per ton for coke. It is understood that last year, coke prices experienced significant fluctuations; after rising continuously, they reached a high of 3200 yuan per ton in June of last year, before falling to around 1300 yuan per ton. At that time, prices in Shanxi Province even dropped to 1000 yuan per ton. Prices began to recover at the start of this year, reaching a peak of around 1750 yuan per ton by mid-February. Recently, however, prices have dropped back to around 1400–1450 yuan per ton, and are gradually stabilizing. However, analysts still believe there is room for further declines in coke prices. Pei Ao, an analyst at Langge Steel, told reporters that currently over 90% of coke is used in the steel industry. With no signs of improvement in the steel market, it is unlikely that there will be an increase in coke production, and coke prices are still likely to fall by around 100 yuan per ton. Market performance has been unsatisfactory. In March, many steel mills reduced the settlement prices for coke purchases. For example, the price of coke used in Tianjin Steel Pipe production has dropped by 300 yuan per ton; the purchase and settlement price of coke for stainless steel production in Tangshan has been reduced by 150 yuan per ton. The purchase prices of coke for other steel mills in the Tangshan area have been lowered by 150–200 yuan per ton, while the purchase price of coke for Shougang has been reduced by 200 yuan per ton. Coking companies suffer a loss of around 100 yuan per ton of coke. Zhang Bochun, secretary-general of the Hebei Coking Industry Association, said that currently coking companies lose about 100 yuan per ton. The reason is that during the period of high prices earlier on, excessive inventory of raw materials was purchased, and due to a lack of demand from downstream industries, this inventory has struggled to be sold off. It is understood that in mid-February, the price of coking coal, which is used as a raw material for coke, was still around 1,400 yuan per ton; now it has dropped to around 1,150 yuan per ton. “Coking companies suffered severe losses in the second half of last year. “At the worst of the losses, the cost per ton of coke reached 1,000 yuan,” said Zhang Bochun, referring to how prices rose steadily in the first half of last year before plummeting in the second half. Zhang Gangfeng, secretary-general of the Shanxi Coking Industry Association, also said at the recently held \"2009 Coking Industry Operation Information Release and Market Situation Analysis Meeting\" that Shanxi’s coking enterprises are currently losing 100 yuan per ton of coke. Both Zhang Bochun and Zhang Gangfeng believe that if this situation continues, an industry reshuffle is inevitable, and a large number of coking enterprises will go bankrupt. Zhang Gangfeng emphasized that it should take no more than two months. Or the purchase of coal from abroad could drive down domestic coal prices. \"The coke industry should work together with steel companies to bring down coal prices.\" ”At this point, Zhang Gangfeng became very emotional; it is necessary to establish a unified mechanism for centralized procurement of imported coal, relying on the China Coking Industry Association. According to industry insiders, the price gap between domestic and foreign coal is not significant at present; due to the long transportation distances, domestic companies are still reluctant to purchase coal from abroad. However, Zhang Gangfeng believes that steel companies should negotiate with foreign coal companies in order to obtain favorable overseas coal prices. As a result, domestic coal companies would be forced to lower their prices in order to compete for market share, thereby helping to keep coal prices down. “The profits from coking coal remain high. In terms of the cost of coking coal, the extraction cost for large-scale mines is 500 yuan per ton, while that for local and individual mines is only 300 yuan per ton. Calculating accordingly, the overall social cost is around 100 yuan per ton. Yet, the selling price of one ton of coking coal exceeds a thousand yuan. ”Zhang Gangfeng explained that the costs for coke manufacturers remain high; coke producers in Shanxi have to pay an energy fund of 72 yuan per ton of coke. A pollution fee of at least 18 yuan per ton. This post was last edited by ryn on 2009-4-5 07:53]
News link: “Huaneng’s contract coal price remains unchanged from last year” “Huaneng’s bottom line is to keep the price at the same level as last year.” ”Yesterday, Cao Peixi, chairman of Huaneng International, said that the coal market in China is facing an oversupply this year. Huaneng hopes to see a reduction of 50 yuan per ton compared to last year’s contract prices for coal, but coal companies prefer to see price increases year after year. An insider at Huaneng Group explained that the contract prices at the beginning of last year were different from those at the end of the year; the “prices from last year” mentioned here refer to the contract coal prices at the start of last year. Cao Peixi said that the National Development and Reform Commission is working hard to coordinate matters, and believes that the contract coal price will remain at last year’s level in the end. This is largely in line with information previously obtained by our newspaper, **indicating that the guideline price for thermal coal contracts set by the National Development and Reform Commission has risen by 4%. It is understood that this increase has been generally approved by the power companies. It is understood that whether Huaneng International can turn a profit in the first quarter of this year still depends on the price of contracted coal. In the first quarter, contracted coal accounted for 50%–60% of the total consumption. According to calculations, as long as the contract coal price remains at the level it was at the end of last year, losses can be avoided. The reporter learned that, with the contract coal prices still not finalized, the company has increased its purchases of spot coal from overseas, and it plans to import approximately 2 to 3 million tons more of coal this year. A senior executive at China Resources Group told reporters that **the regulatory body’s guideline price for thermal coal is about to be announced, and once that price is set, the schedule for the international coal ordering conference will be determined soon.
International coking coal prices have fallen, leading to increased imports by domestic steel mills. UBS has released an analysis report on China’s steel industry, indicating that a settlement price of $129 per ton for coking coal has an impact on the steel industry. The contract price for coking coal between Nippon Steel and the BHP Mitsubishi Alliance in 2009 was $129 per ton, a 57% decrease from $300 per ton in 2008. The settlement price was higher than UBS’ estimate of $85 per ton, and 5% higher than market expectations. More importantly, this is significantly lower than China’s current domestic price of 1,200 RMB per ton. This could lead Chinese steel mills to increase imports until domestic producers concede. The importance of iron ore contract negotiations has declined. Since November 2008, the price of spot imported iron ore from India has dropped significantly to $81 per ton, a 38% decline on a monthly basis. The average import price in China is $123 per ton (a 12% drop on a monthly basis), which is lower than Australia’s price of $115 per ton and Brazil’s price of $151 per ton. This immediately led to imports from India rising by 6.1 million tons in December, a 151% monthly increase, to 10.2 million tons, while China’s overall iron ore imports increased by only 6% on a monthly basis. In fact, iron ore imports from Australia and Brazil in December dropped by 2.3 million tons and 2.7 million tons respectively. Australian producers reduced the FOB price by 29% per month in December 2008, while Brazil lowered the FOB price by 25% and 24% per month in January and February 2009, respectively. In February 2009, Australian iron ore accounted for 43% of China’s total imports, followed by India (25%) and Brazil (17%). Iron ore imported from India remains the cheapest, at $65 per ton, while iron ore imported from Australia and Brazil costs $82 and $93 per ton respectively; the average import price in China is $80 per ton. Although quality differences cause such price variations, China is also under pressure to seek the suppliers with the lowest prices. In addition, the demand for low-end products is also stronger than that for high-end products. Therefore, UBS believes that the final outcome of iron ore contract settlements in 2009 is not as important as before, as spot prices are already 30% to 40% lower than the contract prices from 2008. Moreover, UBS believes that the impact on the cost structure of steel mills resulting from new settlement prices will be limited, unless those prices are significantly lower than spot prices, which is unlikely to happen. Although miners wish to delay negotiations as they await a strong recovery in demand driven by China’s economic stimulus measures, Chinese steel mills have countered with a \"total volume discount\" strategy, which favors the miners who reach an agreement first. UBS believes that Brazil’s CVRD and other mining companies are eager to regain the market share they have lost, although CVRD has stated that it will follow the settlement prices set by other mining companies. Through aggressive price cuts, Brazil regained some of the market share it had lost in February. UBS believes that if this trend continues, it will help support freight rates for strait-type vessels. UBS is optimistic about steel mills that have the right product portfolio and variable input costs. The steel mills rated by UBS Research do not have coking coal mines, and their monthly purchasing prices for coking coal also vary. Russia has been less affected, as it is largely self-sufficient in its supply of coking coal. In the United States, the contracts have been settled, and very few manufacturers have been affected. UBS’s favored stocks include Maanshan, Nucor, Gerdau, Steel Authority of India (SAIL), and Novolipetsk.
At present, it is only possible to phase out energy-intensive small coking plants; taking advantage of the economic crisis to adjust the market and accelerate the restructuring of the industrial sector. However, the overall outlook is not optimistic.
Our factory is also planning to install 1 million tons of rammed coke ovens.
Taking advantage of the tough market conditions, the coking industry indeed needs to carry out thorough reforms. On one hand, it is necessary to eliminate outdated production capacities and control the overall volume of production; on the other hand, it is important to make rational use of both domestic and international markets in order to reduce the costs of purchasing coking coal. At present, the cost of imported Australian coking coal upon arrival at the port is about 200 yuan lower than that of domestic first-class coking coal.
The environment is the same for any enterprise; we must strengthen our internal capabilities and focus on effective management, while simultaneously seeking opportunities to achieve growth and development.
So far, the price of coke has dropped by nearly 400 yuan since early February, representing a decline of over 20%. Although coke prices are still declining slightly in some areas, they have essentially entered a period of relative stability. At present, the prices set by most manufacturers are already on par with the cost of coking raw materials; in some cases, they are even lower than the cost of coking. In other words, the total costs associated with production in coking plants, including labor and management expenses, are so high that operations are on the verge of loss. Moreover, most manufacturers have reduced their production levels to over 60%, which has led to a relatively stable price for coke. However, the steel mills believe that there is still room for coke prices to fall, so they will continue to purchase in limited quantities or at low prices in the near future. As a result, the inventory pressure on coking plants remains high, and it is expected that coke prices will stay low in the coming period. The ex-factory price of secondary metallurgical coke in the Hejin area is 1,400 yuan, in the Taiyuan area it is 1,450 yuan, in the Linfen area it is also 1,450 yuan. In the Tangshan area, the ex-factory price is 1,550 yuan, in Tianjin it is 1,600 yuan, in Shanghai it is 1,550 yuan. In the Zibo area, the ex-factory price is 1,400 yuan, in the Huainan area it is 1,550 yuan, in the Liaoyang area it is 1,500 yuan, in the Pingdingshan area it is also 1,500 yuan. In the Mudanjiang area, the ex-factory price is 1,400 yuan, in the Benxi area it is 1,400 yuan, in the Qitaihe area it is 1,450 yuan, and in the Wuhai area it is 1,250 yuan.
There’s no need to be pessimistic. Only those with strength can compete, and it’s good to have strong competitiveness
In today’s economic environment, most industries are undergoing restructuring; it’s a process of survival of the fittest, driven by natural selection. However, when it comes to energy, **safety is crucial; stability is of the utmost importance, so you can rest assured.
We are in a very difficult time at the moment, and it is indeed tough for coking plants to survive. However, things will improve once this period passes. Although the entire coking industry is in a downturn, there are still some companies that are taking advantage of the low prices of raw materials to launch new coking projects!
Currently, coke and coal are in a period of intense competition. The downturn in the steel industry has led to continuous declines in coke prices, and since coking industries do not have much influence over the steel industry, they can only try to reduce costs by driving down coal prices. However, such efforts against coal companies yield little result, and coal prices remain high. The current situation in our factory is as follows: coal prices and coke prices keep changing; sometimes we make a profit, sometimes we have a gross profit, and then again we suffer losses. It’s really tough to get by!