Despite recent price hikes for their product, the coke industry of Shanxi Province, which supplies more than 80 percent of China's annual coke exports, has decided to slash production by 20 percent to keep the year's total output under 80 million tons, the Economic Daily reports on Tuesday.
The decision comes after export prices for Shanxi coke jumped to US$136.25 per ton. The country's average coke price was higher than US$125. Calling the price hikes "a mild rebound", president Xue Jun of the Shanxi Coke Industrial Association said that many local coke producers were still operating in the red.
Official statistics revealed that the Shanxi coke industry has registered an aggregated loss of 357 million yuan between January and April, with its foreign exchange revenue down 50 percent over the same period last year.
Imposing a production limit will help the sector retain its competitiveness in the market and contain losses, Xue said.
Experts said that the year's coke demand in China was estimated to be about 185 million tons while the country's production capacity has already hit 300 million tons, of which 150 million tons comes from Shanxi, a traditional coal and coke base in central China.
Last year, the market price for Shanxi Coke tumbled down from its record high of 2,000 yuan per ton to 700. To survive, some companies even sold their coke at prices lower than the raw coking coal.
Secretary-general Zhang Gangfen of the Shanxi Coke Industrial Association urged the nearly 200 member companies to abide by the production limit.
"If infighting remains, the whole industry will lose its competitiveness in the market," he said.
(Xinhua News Agency June 28, 2006)