Himfr Forecasts Trends in China's 2010 Coke Market

Jun 29, 2010, 10:00 ET from Himfr.com

BEIJING, June 29 /PRNewswire-Asia/ -- Himfr.com, one of China's leading B2B search platforms with more than 30 B2B industry websites to its name, forecasts the 2010 China coke market.

Under China's new policy of macro-control in real estate and auto sales, demand in China's domestic steel market has waned. Steel prices have declined in May and continue to show downward trends. At the same time, since the beginning of the year the strong price of coke has also fallen slightly. In July, with the further implementation of real estate macro-control policies, as well as action that will be taken in the iron and steel industries to curb production due to low demand, the Chinese steel industry will remain weak. With this downward trend in China's steel industry it is expected that China's coke price will experience a slight downturn trend.

In May, affected by a slight rise in coke prices, the main producing areas implemented capacity limiting policies. China's coke output and stockpile had increased to overly high limits. According to statistics, China's coke output in May reached 33 million tons, up 3.3%, and showing a year-on-year increase of 20.5%. From January to May, China's total coke output reached 159 million tons, year on year up 25.7%. China's steel production reached a new high this year, which further exacerbated the steel industry's problem in supply exceeding demand. Effects of high inventory in the steel industry create problems downstream for the coke industry, as domestic iron and steel will cut back on coke purchases when faced with low demand for their product. Meanwhile, China's coke supply has increased substantially, and is causing China's coke market supply to be greater than demand.

Affected by the decline in demand, some steel companies have begun to cut coke purchases. At present, with the continuing weakness of the domestic steel market, including steel shipping difficulties, the stock of steel has further increased. According to the survey, affected by the decline in steel prices, some steel companies are also cutting production and maintenance beyond simply coke purchases. At the same time, the situation for steel export is not optimistic, and the steel exports may drop further.

China's coke industry overcapacity is serious. In response to the domestic coke market downturn situation, the five major coke-producing areas reached a tacit agreement on limiting production to keep prices stable. However, from market response, the limited production action has not achieved the intended results. Currently in June, coke prices are still falling.

In summary, short-term, the price of Chinese coke may continue to decline, perhaps by as much a 100-150 yuan / ton.

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