East China's Shandong province is set to accelerate restructuring and transformation in coking industry in a bid to tackle massive overcapacity and waning demand.
The Shandong Economic and Information Techology Committee released a guidance note yesterday for the transformation and upgrading of coke producers in the province, calling for a joint reorganization between independent coke producers and those enterprises from upstream as well as downstream sectors, such as coal producer, steelmakers, chemical companies. Shandong has 58 coke producers above designated scale as of the end of 2011, involving coke capacity of 62 million tonnes, making it the third largest coke producing province in China. It has now formed three coking industrial clusters, including central Shandong, southern Shandong and southwestern Shandong. So far, Shandong has washed out 60.09 million tonnes of coke capacity.
According to guidance note, coke producers will basically complete transformation during 2014-2016 and meanwhile the restructuring of 41 coke producers that have been included in the national management program. By 2016, the number of coke producers in the province will be reduced within 20, with the combined capacity of less than 40 million tonnes. That means each coke producer shall ramp up coke capacity from 1.06 million tonnes to 2 million tonnes by then. Overcapacity and low concentration in China's coking industry have been a long-standing problem urgently awaited to be resolved.
In comparison with the market demand in 2011, Shandong province faces 55% overcapacity in its coking industry. In line with the province's target for steel capacity to be controlled within 50 million tonnes by 2015, Shandong's coke demand will decrease further to around 25 million tonnes. Based on the current coke capacity in Shandong, it will have up to 60% excess coke capacity by then.
Previously, North China's Shanxi province announced the scheme to consolidate coking industry, saying that over 40 million tonnes of backward coke capacity will be phased out from 2012 till 2015. Meanwhile, the number of independent coke producers will be reduced to around 40 from the current 160