Capacity increase, a key factor behind China's coke market weakness in 2022

sxcoal.com Policy,  Production & Sales 2023-01-17 15:45:12

China's coking industry underwent concentrated capacity reduction during 2020-2022, along with the government's supply-side reform started in 2016. The subsequently enhanced industrial concentration and higher modernization are more conducive to China's environmental protection and energy conservation campaign.


Although the policies for the elimination and replacement of coke production capacity varied in different places, the approvals for new capacity have consistently turned stringent, resulting in a slow pace of new capacity construction. This led to a large gap after intensive capacity elimination, the main reason for the sharp rise in coke prices in 2021.


Year 2022, especially the second half, saw the opposite price trend as supply tightness eased. Coke production increased after new capacities were put into operation in succession, coking plants gradually lost pricing power, and coke prices headed downwards. Meanwhile, high coking coal prices continued to eat into cokemaking margins, resulting in low profit in the industry.


How much capacity did China add in 2022, how much had been built and put into production, how much remained under construction, and how much was proposed? What is the current capacity reduction situation?


Fenwei's latest report shows that in 2022, China added 52.57 Mtpa of new production capacity and eliminated 26 Mtpa, indicating a net increase of 26.56 Mtpa. Among them, Shanxi increased 11.09 Mtpa and eliminated 13.77 Mtpa; and Hebei added 8.15 Mtpa and eliminated 4.65 Mtpa.



By the end of 2022, China had a total 557.35 Mtpa of coke oven capacity in operation, 21.02 Mtpa in drying and heating stage, 95.95 Mtpa under construction and 142.95 Mtpa proposed to build, according to the semi-monthly report.



Among the operating ovens, the capacity of coke ovens with chamber height at 4.3 meters or below totaled 85.35 Mtpa, accounting for 15.31% of the total; capacity of coke ovens between 5-5.5 meters was 176.14 Mtpa, 31.60%; that of coke ovens of 6 meters and above totaled 281.10 Mtpa, 50.44%; and heat recovery coke ovens had a total capacity of 14.76 Mtpa, accounting for 2.65%.



Based on the capacity adjustment plan of coke enterprises, Fenwei expects China's coke production capacity to continue to maintain a growth trend in 2023, with new production capacity reaching 60.3 Mtpa and to-be-eliminated capacity at 46.08 Mtpa, indicating a net increase of 14.22 Mpta.


The impact of capacity changes on the profits of coking plants cannot be ignored, and keeping abreast of the dynamic changes in production capacity across the country will help better study and judge the coke price trend and provide more effective assistance for corporate decision-making.


Fenwei has carried out long-term tracking, recording, sorting out and summarizing the situation of China's coking industry, especially the changes in production capacity of coke enterprises. It mainstains a comprehensive database on the changes in nation's cokemaking capacity. At the same time, the latest production capacity changes will be updated every half a month.


To subscribe or learn more about the report, please visit China Coke Production Capacity Dynamic Tracking and Forecast.


For details, please feel free to contact us by +86 351 7219 322 or sales@fwenergy.com.


(Writing by Emma Yang  Editing by Harry Huo)
For any questions, please contact us by inquiry@fwenergy.com or +86-351-7219322.

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