Higher yield than demand, China's coke industry to see integration

With the booming of China's coke industry, China will witness surplus coke yield and the industry is expected to experience large-scale integration in a few years, said sources from China's First International Forum on Coal, Coke and Chemicals Industry here on Sunday.

China has a built mechanized coke capacity of 250 million tons. With the throughput in construction of 80 million tons, China will boast an annual coke capacity of 330 million tons, 136 million tons more than the domestic consumption in 2004 of 194 million tons, said Hou Shiguo, deputy director of the Department of Industrial Policy of the State Development and Reform Commission ( SDRC).

According to Hou, it is estimated that China's annual coke yield capacity will reach 290 million tons at the end of 2005 with a surplus of 30 to 40 percent over demand.

However, with China's increased efforts in macro-economic control of the steel industry, which uses coke as its major raw material, the expansion of domestic coke demand is expected to be restricted this year to some extent.

On the other hand, with China's export policy direction for resources and high-energy consumption products changing from encouragement to a neutrality or restriction, China does not expect exports will absorb more of the surplus yield of the country. For example, China canceled taxation rebates for coke exporters in 2004.

Though China's coke yield capacity is expected to increase to over five million tons, Europe's dependence on coke imports from China is reducing, said Andrew Jones of Resource-Net of Belgium.

As a result of the excessive coke surplus yield capacity and control efforts from the central government on the coke industry, Hua Zugui, Chairman and CEO of China Coal and Coke Holdings Limited, a major coke producer and seller in the country, said that the industry is likely to see a large-scale integration in one or two years.

According to Hua, China's coke and chemical industry is too dispersive and it not organized optimally. The expansion of the industry is too hot and the problems of resource waste and environmental pollution are serious.

Together with other related departments, the SDRC issued policy on promoting the healthy development of the calcium carbide, ferroalloy and coke industries at the end of last year as well as the authorization conditions for coke enterprises.

Hua said that with the authorization conditions taking effect this January, China enhanced its efforts to improve the coke industry.

"It is expected that in the next two years, those small coke enterprises of high energy consumption and high pollution which cannot meet the demands and standards of the country will be put down gradually," said Hua.

"It means more market opportunities for large and standardized enterprises and will be good for industrial integration and optimization," said Hua.

Hua predicted that the peak time for the integration of the coke industry is expected to come one year later.

Source: Xinhua