CONF: China's met coke industry likely to recover but not just yet
Speaking at the conference, Chen explained that the coke sector has been in a downturn since 2022, which is generally in sync with the downward trend of the steel industry since then.
Considering the current condition, China's met coke industry will probably remain in the doldrums this year, Chen admitted, adding that 2025 is likely to be the most challenging year that coke firms will have experienced in recent memory. The industry will need to eliminate more production capacity to cope with the poor situation, Chen suggested, warning conference delegates that the years-long slump may not end until 2028.
During this year, China's coke capacity is projected to increase by a net 9.1 million t/y from 2023 to about 575 million t/y, a slower rise compared to the past three years, Chen noted. He also forecast a reduction in coke output by around 9 million tonnes this year.
With the prospects for any uptick in steel production this year being dim, domestic demand for coke is expected to remain sluggish. The weak demand, together with the ongoing supply glut, is putting more pressure on the profits of coke firms, Chen remarked. Despite the dwindling profits, the industry is becoming more adept at adjusting output and reducing production when profits are under threat, he added.
On a brighter note, Chen suggested that China's coke exports are likely to remain resilient due to robust demand from India and Southeast Asia and forecast modest growth in China's coke exports of about 230,000 tonnes this year to reach 9.1 million tonnes.
The latest data from China's General Administration of Customs show that the country's exports of coke and semi-coke fell by 11.5% on month to 770,000 tonnes in July, though the total was still higher by 20.2% from the same month last year, as Mysteel Global reported. This took China's total coke and semi-coke exports to 5.64 million tonnes in the first seven months of this year, also up by 20.2% on year.
Meanwhile, Chen cautioned that Indonesia is aggressively increasing coking capacity and ramping up its coke exports by promoting their cost advantage. This could pose challenges for China's coke exports, and he urged industry players to keep a close eye on export prices.
Chen also called for speeding up consolidation within China's coke industry to boost efficiency, in the same way that the steel and coal industries have done. These two sectors have already seen mergers and acquisitions, with the top ten companies in each accounting for considerable shares of the total output of the commodities.
By comparison, the coke industry remains fragmented, with the top ten coke producers accounting for only 59.97 million tonnes or 12.2% of the total capacity, underscoring the urgent need for further consolidation, he suggested.
He also compared this situation to that in the United States, where the number of coke producers has drastically decreased over the past decade. By the end of 2023, only six coking companies remained in the US, four of which are independent producers. These independent companies produce about 6.02 million tonnes of coke per year, or 42% of the total coking capacity in the country.
Written by Winnie Han, hanyueran@mysteel.com
Edited by Russ McCulloch, russ.mcculloch@mysteel.com
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