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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, industry experts, scholars, and leading coke producers—expressed deep concern over the current state of the domestic coke market. The sector, once a thriving pillar of the province's economy, is now facing severe challenges. As the market continues to weaken, Shanxi, the nation’s major coke-producing region, has been hit hardest.
The situation seems to have turned abruptly. “The best days in the coke industry were from 2003 to the end of 2004,†said a veteran from a coking enterprise in Jinzhong. At that time, demand was so high that buyers had to queue up just to pay for coke before it even left the oven. Customers would pile money on the desk, and even government officials would call in favors for priority delivery. However, this golden era has vanished. On the Hurun Energy Rich List released just days before the forum, eight of the top 10 wealthiest individuals came from the Shanxi coke industry. But now, prices have plummeted, and companies are struggling to stay afloat.
One 600,000-ton coke company is losing about 200,000 yuan per day. “The sun has to pay 200,000,†the boss joked, but the reality is grim. By July, inventory levels across Shanxi’s coke companies reached record highs. Tianjin Port held 3.5 million tons, Lianyungang had 1 million tons, and Qinhuangdao’s stock was around 1.8 million tons. Companies are operating at a loss, with some even shutting down ovens. Profit declines in the coke industry have become the worst among the province’s key sectors. From January to August, the industry lost 653 million yuan—over four times more than the same period last year.
Ex-factory prices for first-class metallurgical coke in Linyi have dropped below 700 yuan/ton, while Tianjin Port prices have fallen to around $130/ton. According to data from the Shanxi Provincial Commerce Department, coke exports in the first ten months of 2005 fell by 15.79% to 4.95 million tons, with export value dropping 42.1% to $975 million. Most companies are now losing about 150 yuan per ton produced. Even top earners like Zhang Xinmin, who ranked first on the 2005 Hurun list, have not escaped the downturn. His group is also suffering losses of over 100 yuan per ton. Many enterprises have already shut down or reduced operations, and more will follow.
As the crisis deepens, uncertainty looms large. A senior executive from a Linyi-based coke company lamented, “There won’t be so many people meeting next year.†Last year, the market had weakened, but some experts still expected global supply to remain tight until 2006. That optimism led one veteran to plan an expansion to 1 million tons. But before the plan could be implemented, the market changed drastically. This year, he can barely operate at 40% of his existing capacity, and still faces a backlog of nearly 40,000 tons. The shrinking market has even affected railway transportation, with rail authorities reaching out to coke companies to help meet transport targets.
Experts point to multiple factors behind the crisis: overproduction, declining international demand, and poor industry structure. Domestic coke supply is far exceeding demand, with a projected surplus of nearly 100 million tons by the end of 2005. Meanwhile, international markets are showing signs of decline. New production capacities in Europe, Japan, the U.S., and India are further intensifying competition. Locally, Shanxi’s coke enterprises are not only structurally inefficient but also less competitive compared to those in Hebei. With over 1,000 coke companies in the province, fierce internal competition has exacerbated the problem, as seen in the failure of the Mianshan Convention.
Despite the bleak outlook, structural adjustment is seen as the path forward. Mr. Xu Guangcheng, former chairman of the China Coking Institute, noted that while the $400-per-ton export price is unlikely, a return to $200–$250 is possible if the industry reforms according to scientific development principles. Some forward-thinking companies are already taking steps toward transformation.
First, many are expanding into coal chemical products. For example, the Shanxi Coking Group launched a 300,000-ton tar processing project, producing 32 types of fine chemicals—the largest of its kind in China. Taihua Group is also investing heavily in benzene hydrogenation and tar processing projects. Most companies are now planning and implementing chemical production initiatives, pouring billions into new ventures.
Second, advanced technologies are being adopted to modernize operations. Shanjiao Group invested 900 million yuan in building 10,000-ton coke ovens and gas purification systems. It has also constructed the most advanced large-capacity coke ovens in China. Other companies are adopting environmentally friendly technologies, such as the SJ96 clean non-recovery ovens and heat recovery ovens, which are being widely promoted.
Third, strategic research is becoming a priority. Enterprises like Zhaobao Coking Eco-Industrial Park have partnered with research institutes, while Others have entrusted universities and industry associations with developing long-term strategies.
Amid the crisis, the road to recovery lies in innovation, efficiency, and restructuring. The spring of renewal may be coming—but only through bold and sustainable change.
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