SHANXI, May 6 -- China's major coke producing province Shanxi recently announced a raise in the guiding prices for coke in different areas by 30 yuan/ton or 60 yuan/ton since the coke inventory in coking plants and steelworks decreased sharply.

    Shanxi Province Alliance of Coking Enterprises recently issued the guiding opinions on May coke market, deciding to adjust up the price of coke for coking enterprises in Hebei, Shandong and Inner Mongolia by 30 yuan/ton and coke for enterprises in Shanxi and Shaanxi by 60 yuan/ton on April's basis from May 1, 2009.  The guiding prices had been adjusted down by a combined 250 yuan/ton in March and April.

    The price raise may result in the release of production capacity lying in idle, said analysts, pointing out that the pressure on further price raise will be big as the downstream demand has no substantial recovery.

    In fact, while adjusting up the coke price, the alliance hasn't eased its control over production capacity. It has asked its member enterprises to adhere to the measures on restraining production to the April level, which means about 60 percent of China's coke production capacity will still be put under control.

    According to industry insiders, the recent coke stockpiles in steelworks and coking plants have been staying at a lower level thanks to the efforts jointly made by coking enterprises in limiting production in the preceding period, and the coke market price has showed signs of rebounding.

    However, industry insiders noted that the real market price may not reach the level of the guiding price, due to the resistance of the downstream consumers.   

    At present, China's coking industry is still in the red, and coking enterprises in Shanxi, in particular, suffered big losses. 

    China will have 100 million tons of coke production capacity lying in idle as the its coke demand may further go down to 280-290 million tons this year, China Association of Coking Industry predicted. 

    The big overcapacity will make it a long way for China's coking industry to recover.

    China's current coke production capacity has reached 380 million tons, and its coke output in 2008 incurred the first negative growth since 1999. 

    Shanxi, a province with a coke production capacity close to 160 million tons in 2008, has drawn up a plan for boosting the coking industry, calling on effective control over coke production capacity. It aims to control its coke production capacity within 140 million tons at the end of 2011 and 120 million tons by 2015.

    (Source: chinamining.org)