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On October 20th, Tangyi Hotel in Linyi City, Shanxi Province, hosted the Sustainable Development Forum of the Shanxi Province Coke Industry Association. Attendees, including government officials, experts, scholars, and industry leaders, expressed deep concern over the current state of the domestic coke market. The sector, once a pillar of the province's economy, is now facing severe challenges. As one of the largest coke-producing regions in China, Shanxi has been hit hardest by the downturn. Despite being a forum on sustainable development, the discussions mostly revolved around how to survive the current crisis.
The once-thriving coke industry now feels like it has fallen into a deep freeze. "The best days for the coke industry were from 2003 to the end of 2004," said a veteran from a coking enterprise in Jinzhong. Back then, buyers had to queue up to pay cash, and even government officials would call in favors for priority delivery. However, the situation has drastically changed. According to the Hurun Energy Rich List released on October 17, eight of the top 10 richest individuals came from the Shanxi coke industry. But just as suddenly, prices collapsed, and profits vanished. A 600,000-ton coke company now loses about 200,000 yuan per day. “The sun has to pay 200,000,†the boss joked, though the reality was far from humorous.
By July, the backlog of coke products in Shanxi reached record levels. Tianjin Port held 3.5 million tons, Lianyungang had 1 million tons, and Qinhuangdao’s inventory hit 1.8 million tons—nearly at saturation. Meanwhile, company inventories surged, with some plants operating at reduced capacity. Profits in the coke industry have plummeted, becoming the biggest loss among the province’s key industries. From January to August, the sector lost 653 million yuan—over four times higher than the same period last year. Ex-factory prices in Linyi fell below 700 yuan per ton, while Tianjin Port prices dropped to around $130 per ton. Export volumes also declined sharply, with exports falling by 15.79% in the first ten months of 2005. Most companies are now losing about 150 yuan per ton produced.
The Zhang Xinmin family, ranked first on the 2005 Hurun Energy Rich List, was not spared. Their Gold Coking Group is also suffering losses of over 100 yuan per ton. Many companies have halted production, and more are expected to shut down soon. “There won’t be so many people left next year,†said a CEO from a Linyi-based coke company, expressing deep pessimism. Last year, the market showed signs of weakness, but some experts had predicted that international supply would remain stable until 2006. A veteran planned to expand his production to 1 million tons, only to see the market collapse before he could implement the plan. This year, he couldn't even operate at 40% of his existing capacity.
The shrinking market has also affected railway transportation. In August and September, the railway department contacted coke companies multiple times to organize shipments. Last year, 70% of sales were done via road transport due to tight rail capacity. Experts believe the current crisis stems from overproduction, declining global demand, and an unbalanced industry structure. With over 1,000 coke enterprises in the province, fierce competition is common. The failure of the Mianshan Convention serves as a clear example of this chaos.
Structural adjustment is seen as the only way forward. Mr. Xu Guangcheng, former chairman of the China Coking Institute, emphasized that returning to a price of $200–$250 per ton is possible if the industry adopts scientific development and eliminates outdated technology. Some forward-thinking companies have already begun transforming their operations.
First, many are expanding beyond traditional coke production. For instance, the Shanxi Coking Group launched a 300,000-ton tar processing project, producing 32 types of chemical products. Taihua Group is also investing heavily in crude benzene hydrogenation and tar processing projects. Most coke companies are now planning or implementing “chemical production†initiatives, pouring billions into new ventures.
Second, companies are adopting advanced technologies to modernize their operations. Shanjiao Group invested nearly 900 million yuan to build a 10,000-ton coke oven with gas purification and crude benzene recovery systems. It also constructed the most advanced large-capacity coke oven in China, featuring a 6-meter carbonization chamber and waste treatment facilities. Several environmentally friendly coke ovens are now being promoted across the region.
Third, companies are conducting strategic research to guide future development. Zhaobao Coking Eco-Industrial Park partnered with the Guanghua Research Institute, while Xiaoyi Jinhui Coking Company worked with Tsinghua University. Qingxu Yaxin Coking Co., Ltd. collaborated with the China Coking Industry Association to explore long-term growth strategies.
As the industry struggles, the path to recovery lies in innovation, technological upgrades, and structural reform. Only through these efforts can Shanxi’s coke sector find its way back to stability and sustainability.
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