The downstream users are in arrears with coking enterprises, coking enterprises are owed to banks, and coking enterprises and coal mines are still owed to each other. With the continuous weakening of the coke market, the problem of mutual arrears in the upstream and downstream industrial chain funds of the Shanxi Coking Industry is becoming more and more serious. According to data provided by a medium-sized coking enterprise in Jinzhong City, the total amount of arrears between coal mines, users, and banks has exceeded 80 million yuan. Industry insiders estimate that the "four-corner debt" in the coking industry in the province has already reached more than 10 billion yuan.
Since the beginning of this year, the coke market has continued to weaken, causing the downstream users to intensify the arrears of the coking enterprises, even with the phenomenon of malicious default. In June of this year, shortly after the Shanxi Coke Association proposed to limit production and insure prices, steel companies in other provinces invited Shanxi Coking Co., Ltd. to bid with harsh payment methods. According to a survey of several large-scale coking companies in Linyi City, the amount owed is generally more than 40 million yuan, and there is a company up to 70 million yuan. The analysis of the economic situation released by the Shanxi Provincial Economic Committee in mid-September concluded that the coking industry accounts for high receivables and funds for finished goods, the income reflected in the form of sales revenue in the forms of creditor rights increased, book profits expanded, and capital turnover and operations were difficult.
Most of the coking projects rely on bank loans, and generally have to pay two to three million yuan of bank interest each month. The lack of funds caused coking companies and banks to fail to settle on time. According to the investigation of the Credit Union of Linyi City, it is indeed difficult for the coking enterprise in Linyi City to repay the loan. In order to pay interest, some coking enterprises had no choice but to refinance, but financial institutions were concerned about risks but were reluctant to lend, causing companies to default on bank loans. According to sources, only the Shanxi Provincial Credit Union’s loan to the coking industry from 2003 to 2004 amounted to 20 billion yuan. With the arrival of the loan repayment deadline in 2006, the coking industry’s debt crisis will fully erupt.
The arrears between coking companies and coal mines have been formed since last year. From last year until July this year, the price of coal has been rising. The main coking coal was once priceless and there was no market. Since January 2005, the Shanxi Coking Industry had limited production due to the “coal shortage”. Under this background, in order to buy coal, coking enterprises use prepayment methods to deal with coal mines. Prepayments are generally as low as several million yuan, and as many as tens of millions of yuan. Since the mining accidents in Shanxi Province have continued since last year, coal mines have stopped production and rectified every other day. Some of these coal mines have been shut down or even shut down in the process of rectification. As a result, the advance payment for coking enterprises has been abandoned. A company in Jinzhong City paid only 10 million yuan of coal after paying 10 million yuan in advance for a coal mine in Liulin. The coal mine was shut down and the rest of the money became dead. However, some coal products that are not in short supply, such as high-sulfur coals, have become coking coal companies because of weak demand. Or Jinzhong's enterprise, the funds owed to the coal mine amounted to 15 million yuan.
Insiders pointed out that the “four-corner debt” of the coking industry not only causes a heavy burden on the coking industry, but also hides huge financial risks. The main contradiction of the “four-corner debt” is the continuous weakening of the coke market and the continuous increase of losses in the coking industry. From the current situation analysis, this situation is difficult to be effectively improved in the short term, the relevant departments should have a high and sober awareness and vigilance, plan ahead, develop appropriate countermeasures to prevent risks.

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