Shanxi aims to cut coke production capacity by about 40 million tonnes per annum (Mtpa) in 2019-20, to control its total coke capacity within 147.68 Mtpa, according to a document issued by the provincial government early this week.
According to the document, capacity that haven't yet been launched or have been shut down should be reduced this year, and reduction of capacity in operation should be completed in two years.
The province breaks down the de-capacity mission to several cities as follows:
The move can be regarded as a significant part for the province's whole de-capacity work, however, insiders assessed it wouldn't exert a substantial effect on coke supply in the province or the country.
The current coking capacity of Shanxi can be roughly calculated at 188 Mtpa, based on how much it wants to hold and cut, while Shanxi's coke production totaled 92.57 million tonnes last year, that is to say, the capacity utilization rate was only less than 50%!
Facing such a huge idling capacity, cutting 40 Mtpa almost has no effect on the industry chain.
Also, cutting capacity doesn't mean the reduction of production. On the contrary, it will drive up coke output to a certain extent, insiders analyzed.
Apparently, Shanxi will prioritize the elimination of backward capacity, while newly built capacity will be released in the short term.
Meanwhile, Shanxi required all coke enterprises to meet the special ultra-low emission standards from October 1. By then, environmental pressures will be relaxed, conducive to producing more products.
As for the elimination timeline for 4.3m coke ovens, Shanxi states no as clear as Hebei province. Considering the large amount of ovens of this kind across the province, the elimination is hard to be put in place in the short term.
(Writing by Alex Guo Editing by Tammy Yang)
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