Met Coke: China’s capacity phase-out target expected to gather pace

The eastern province of Shandong in China has so far reduced only 1.85 million tonnes (MnT) of metallurgical coke production, against a target of 16.86 MnT announced early this year; and hence, it is likely that the pace will be doubled up in near future.

The coking capacity reduction plan has been formulated by the Shandong Provincial People’s Government in order to achieve the goal of reducing coal consumption by 10% during the 13th Five-Year Plan period in Shandong province.

According to the governmental guidelines, Shandong’s coking capacity should be curtailed by 10.31 MnT in 2019, and another 6.55 million tons in 2020. Thus, a total of 16.86 MnT of coke capacity would be reduced in two years across 24 coking enterprises. Reduction tasks for 2020 must be completed by the end of April 2020.

The capacity phase-out plan includes 12.05 MnT of coking capacity of independent producers, 3.81 MnT of coking capacity of steel mills, and 1 MnT of coking capacity in foundry.

Shandong’s existing coking capacity is 59 MnT, including 40.8 MnT of independent coking capacity, 16 MnT of steel plants’ coking capacity, and 2.2 MnT of casting coke capacity.

42.14 MnT of coking capacity would remain before the end of April 2020, including metallurgical coking 40.94 MnT, and foundry coke 1.2 MnT if the coking capacity reduction plan is strictly implemented.

Nevertheless, the capacity under construction and projected in Shandong is 4.65 MnT, of which 1.2 MnT are planned to be put into production in October this year, and 1.2 MnT are under construction and planned to be operational spring next year, another 1.25 MnT would start construction this October and another 1 MnT is yet to disclose construction date.

PRICE ASSESSMENTS

Chinese met coke export prices for the 64% CSR and the 62% CSR grades are currently assessed at around USD 281.00/MT and USD 268.00/MT FOB China respectively.

Indian met coke import prices for the 64% CSR and the 62% CSR grades amount to USD 273.00/MT and USD 252.00/MT respectively on CNF India basis.

Currently, India’s domestically produced met coke prices for the blast furnace grade are hovering at around INR 24,000/MT (east coast) and INR 23,750/MT (west coast).