China's coking industry will cut coke output by 40 to 50 percent from September in a bid to influence market supply and demand in the following months.

    After a big boom in the first half of 2008, coking industry suffered a sudden blow in August from the rising prices in the upstream coal industry and the falling demand in the downstream steel industry, together with the expansion of output capacity inside the industry.

    The Shandong coke producer coalition held a meeting recently with local coking industry associations and enterprises from the coke-producing Shandong, Hebei, Shaanxi provices and Inner Mongolia Autonomous Region, urging enterprises to cut the production, sales and transport of coke in September, so as to control market supply.

    The Shanxi coke producer coalition asked enterprises to cut or even stop the purchase of coking coal, especially the prime coking coal since September. Coking enterprises were called to group purchase raw materials and negotiate with coal producers to lower coking coal price by 300 yuan/ton.

    At the same time, the coalition agreed to reduce coke price by 100yuan/ton from August to support steel enterprises in difficulty. Sale on credit is forbidden, for small steel companies may go bankruptcy and bring financial risks to coke suppliers.

    From the beginning of 2008, some big coking enterprises started to make their efforts to build an industrial chain in alliance with upstream coal enterprises, downstream steel enterprises and parallel coking enterprises, contributing to the structural optimization and the development of the whole industry.

    The coking enterprises in Hebei, Shanxi and Shandong provinces followed one another to build coking plants in joint efforts with coal producers and steel makers including Tangshan Iron and Steel Group in North China's Hebei province, the Beijing-based Shougang Group and Shagang Group in East China's Jiangsu province.

    The coking company under Wuhan Iron and Steel (Group) Corporation cooperated with Pingdingshan Coal Group in Central China's Henanprovince to build a 10-million-ton coking base.