\"Transfer\" to assess the coking market

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http://www.mhg114.com/forum.php?mod=viewthread&tid=106617 Recently, the industry organization officially released the \"13th Five-Year Development Plan Outline for the Coking Industry,\" which states that during this period, all outdated production capacities will be phased out, with capacities that meet the required standards accounting for over 70% of the total. It is evident that the domestic coking industry is about to enter a period of accelerated elimination and consolidation, and the coking market will face numerous uncertainties. 　　Through a comprehensive analysis of factors such as the macroeconomic landscape, the overall condition of the industry, market trends, and the current situation of enterprises in this sector, the author believes that the biggest risk facing the coking industry during the 13th Five-Year Plan period may stem from environmental regulations; the largest investment requirements will likely be related to environmental protection upgrades and improvements; the main factors restricting market prices are the speed and efficiency of capacity reduction; and one of the most effective solutions is to focus on developments in downstream chemical processing. 　　As is well known, coking is a typical industry with high pollution and high emissions, and it is highly correlated with the quality of the atmospheric environment. Looking at the areas where fog and haze have occurred frequently in recent years, the coking industry accounts for a significant proportion of the local industrial output; as a result, its pollution-related issues are attracting increasing attention from all sectors of society. Therefore, against the stringent legal environment brought about by the implementation of new laws and regulations such as the Environmental Protection Law and the Air Pollution Prevention and Control Law, coking enterprises will undoubtedly face increasing levels of environmental supervision, while receiving less local protection and leniency. There is a risk that a single instance of illegal emissions reported by the public could lead to restrictions on production, or even result in orders to cease operations altogether. 　　It is undeniable that in some provinces where coking is a major industry, many coking enterprises face serious issues related to environmental compliance; for example, they start construction without obtaining the necessary environmental impact assessments, and begin operations before completing the required environmental inspections ； Moreover, the enterprises that have started operations also have serious environmental violations, such as inadequate environmental protection facilities and emissions that do not meet standards. However, as the emission limits for substances such as sulfur dioxide and nitrogen oxides became stricter during the 13th Five-Year Plan period, companies in this industry faced two possible outcomes: if they wanted to survive, they had to find funds to invest in environmental protection measures, despite the difficulties they might face at the time; and this could prove to be a very substantial expense ； If one still relies on getting by as before, then the day of closure is approaching quickly. 　　It is well known in the industry that by 2015, China’s coking capacity had reached nearly 700 million tons, while the actual production was around 450 million tons, resulting in a severe supply-demand imbalance. It is evident that it are the structural problems on the supply side that have led to a continuous decline in the prices of coke and its by-products over the years, pushing the industry from a profitable state to one that incurs losses. For example, the profits of enterprises above a certain scale dropped from 17.9 billion yuan in 2011 to a loss of nearly 12 billion yuan in 2015 ； Capacity utilization during the same period has also been on a downward trend, and it is currently forced to remain at around 70%. Clearly, the consequences of the imbalance between supply and demand include not only an inversion in the production and sales of domestic coking products and widespread losses for companies, but also the retention of production-related pollution within the country, while around 9 million tons of coke are exported to overseas markets at low prices each year. It should be noted that whether domestic coke prices can return to a reasonable level depends on the speed and intensity of phasing out outdated production capacity. 　　Of course, the coking industry is not beyond salvation; the coking market has not been in a downturn all the time, and there is still hope for companies in this sector. If, while accelerating capacity reduction, the industry adopts a strategy to explore new markets downstream and expands the chemical industry chain involving products such as coke, tar, and coke oven gas, this could prove to be an effective solution. It is necessary to make full use of the advantages associated with by-products, and vigorously develop a range of products including C1 compounds, aromatics, naphthalene, benzene, and other related products, so as to complement the main business with these by-product-related activities, ultimately establishing a production and operation model based on two main businesses.