Chinese Coke Plants to Cut Production

by 30% to Raise Prices

China Hot Metal & Met Coke Production in 2022
Coal Outlook &
Hot Metal Production Met Coke Trade Summit
第二届亚洲煤市展望与贸易峰会

24-25 Apr’23, Bangkok, Thailand

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In 2022, China Met Coke export was 8.95 MnT & Import 0.51 MnT | Quantity in MnT | Source: CoalMint, IEA

Chinese coke plants are trying to increase prices of their products by cutting down production,
as per recent reports. Chinese coke chemical companies plan to cut production by 30% to raise
coke prices. This proposal was discussed at a recent meeting held by the market committee of
the China Coke Industry Association.

Higher supplies impact prices

According to data from Shanghai Metals Market (SMM), in December 2022 China had increased
coke production by 8.3% y-o-y – up to 39 million tonnes (mnt).

After the Chinese New Year (CNY) holidays, many local governments issued policies to promote
economic growth and the real estate market continued to benefit, fuelling market optimism.
However, high inventories of finished steel at mills and muted recovery of end demand weighed
on the coke market.

On the supply side, however, surveys showed that only a few coking companies had reduced

China Met coke prices

Coal Outlook &
Trade Summit
第二届亚洲煤市展望与贸易峰会

24-25 Apr’23, Bangkok, Thailand

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Ex-Tangshan, Quasi-Grade I, China Origin | Source: CoalMint

production during the CNY holidays, which had little impact on overall supply. The capacity
utilisation rate of coke ovens was basically flat compared with pre-CNY level. Therefore,
production cut has become necessary to boost prices.

Plants announce hikes

Coke producers will extend coking periods to reduce capacity utilisation, reduce or stop
purchases of expensive coking coal to cut production costs. Coke chemical enterprises will give
priority to those customers who agree to increase coke prices.

In particular, Shanxi Coking Coal Group in Shanxi province as well as Inner Mongolia-based
Yangdong Coal and Chemical Group announced coke price hikes from 7 March, 2023. Shanxi
Coking expects further growth amid increased loading of production capacities in the steel
industry.

Ban on Australian coal lifted

Resumption of coking coal exports from Australia in the first week of February has weighed on
domestic coal and coke prices. The Chinese government has now lifted the unofficial ban on
Australian coal for all companies compared with just four State-owned companies previously.

Although cargoes have started arriving on Chinese shores, sources informed CoalMint that stiff
Australian coal prices will find few takers in China at the moment, especially when supplies from
Mongolia and Russia are stable. However, China's imports of high-energy Newcastle coal could
be supportive for thermal coal prices and, in turn, keep met coal prices supported.

Mongolia shifts to auctions

The Mongolian government is moving to an auction system for coal sales that will replace the
long-term contracts favoured by Chinese buyers and impose additional transport costs on
customers. China has sought to expand its coal trade with Mongolia in recent years, particularly
after halting shipments from Australia. However, investments in infrastructure, particularly
railway infrastructure, are expected to reduce logistics costs in the coming years.

The Mongolian government is planning to sell 12 mnt via auctions by July this year. The
government intends to use auctions for all its coal sales – including the coking variety for steel
mills and thermal coal for power plants – in 2024 and 2025. The full-scale impact of this move by
the Mongolian government on China's coal and coke markets will unfold in the coming time.

Outlook
China's steel output is set to rise in the coming months, helped by a seasonal upturn in
construction activity, although excess steel stocks will limit the ramp-up in production. Notably,
the Chinese government has reviewed import duties on coking and thermal coal to support
domestic producers. From 1 April, the import duty on coking coal will be 3%, and for thermal coal
6%.

At the same time, zero import duty on coke will be maintained this year. So, coke imports to
China may increase this year amid rising production in Indonesia and other countries of South
East Asia.

2nd Asia Coal Outlook & Trade Summit

How will the met coke and coking coal scenario evolve in China in 2023 and beyond? What is the
outlook on the anticipated increase in met coke exports by Indonesia on the back of rising
capacities in that country? Will exports to China rise significantly? How might this affect
domestic prices of met coke in China in 2023 amid constrained crude steel production?

Find answers to these and other queries at CoalMint's 2nd Asia Coal Outlook & Trade Summit
in Bangkok on April 24-25, 2023, where Mr. Yang Lu, General Manager and Executive Director,
China Risun Group, will share his insights.
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 Esteemed Speakers

Mr. Frank Zhong Mr. Simon Nicholas

Chief Representative – Raw Materials Lead Energy Finance Analyst
& Markets, World Steel Association, Institute for Energy Economics &
China Financial Analysis (IEEFA)

Mr. Jiyuan Wang Mr. Sanjiv Bhargava

Marketing Manager CEO, Bulk Marine,
Shaangu Group, China Hong kong

Captain Ravi Shukla Mr. Yang Lu

General Manager General Manager & Executive Director
Bulk Marine Limited, Hong Kong China Risun Group Co. Ltd., China

Key Focus Areas

Global Energy and Coal Outlook 2025

Coking Coal

China’s top coal supplier Mongolia switches to auctions. How will this
impact coking coal market?

How are global steel mills changing their fuel mix to tackle carbon
emissions?

Global coking coal demand may fall 15-20% by 2030

How is hydrogen gaining momentum in the Chinese steel industry?

Is Indonesia going to be the world’s largest met coke exporter by 2025?

Non-Coking Coal

As renewable energy capacity grows, will India’s coal imports decrease

in the short- to medium-term?

Sanctions on Russia and changing dynamics of Indonesian coal exports

How is coal demand panning out in emerging markets such as

Vietnam, Pakistan, Bangladesh

Pricing Picture

Price outlook for non-coking and coking coal markets in short to

medium term

Effective hedging strategies to mitigate price risk

Future Trends

What are carbon markets and why are they important?

Disruptive mining technologies and decarbonisation in mining

Increasing usage of biomass in Japan’s coal-based power

plants

Shipping & Freights

Have dry bulk freight rates bottomed out? Predictive analysis.

Climate change – Challenge for Shipping

Register on Whatsapp Visit Website

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