Even though coal imports have increased, coal consumption at U.S. coke plants has decreased from 23.4 million short tons in 2006 to an estimated 22.0 short tons to finish 2007. Shifts in coal supply directly impact the supply of coke available. The decrease in U.S. imports of coke has partially been due to structural market changes as domestic steel production has been outstripped by domestic power production as the major coal consumers. U.S. imports may also decline as China is expected to tax coke an additional 15% to make the export tax burden 30% in effort to limit total coke exports to 14m tons per year (tpy).

From 2005 to 2006, the average price of coal delivered to coke plants increased from $83.79 per short ton to $92.87 per short ton while the average open market sales price of coal over the same time period increased from $23.59 per short ton to $25.16 per short ton, with extreme price swings in underground vs. surface coal. This may explain, in part, the reduced consumption of coal at U.S. coke plants.

A new coke plant is in the process of being constructed (alongside an existing coke plant) at a mill run by U.S. Steel, which currently produces 0.45m tons per year (tpy). The addition of the new plant will add 0.67m tpy U.S. coking capacity. Eurozone coking capacity has and is expected to remain stable over the next several years as major firms like ArcelorMittal extend leases on major coking facilities. Turkey is expected to increase its capacity by 0.65 million tpy. Ultimately, this will bring Turkey�s capacity up to 3.8m tpy. The Chinese government, facing environmental pressure, has reduced their overall coking capacity by closing obsolete coking plants, lowering their capacity by as much as 20 million tpy. This has been partially offset by current coking construction projects that are expected to extend their capacity 50 million tpy through next year.

Elevated global demand has been the main driver behind the increase in U.S. exports which rose 12.8% from 2005 to 2006, especially to places like China and Eastern Europe. The driver behind the demand in China has been reduced freight capacity as coal fired power plants stock up for winter and restrictions in freight due to current Chinese policy. Imports of coke to Brazil have risen 59% year-over-year, importing 1.32 million tons to September.

Prices of coke in China have gone from $290 to $308 per short ton in October of 2007 to $353 to $372 per short ton in November of 2007. This is in part due to a reduction of export licenses allowed by Chinese government. These licenses regulate the export of coke and coking coal which restrict the Chinese export markets to 14million tpy. Increased freight costs have also exacerbated the cost of shipping coke.

Annualized global pig iron production has shown a steady 1.0% increase month over month since 2005. Though increased demand may not continue at this pace as worldwide steel markets are expected to soften, U.S. steel production continues to grow, though it has been greatly outpaced by increasing levels of imported steel. With its economy growing at 10% per year, and heavy growth in their infrastructure, the affect of China on the world steel and related coal and coke supplies should continue to be paramount over the coming decade.