What is the driving force behind the rise of coke?

Spot coke has fallen by three rounds since March adjustment, with a total reduction of 250 CNY/ton. Major coke-producing enterprises are in the production profit and loss line, and some of them are even in a small loss state. In order to reduce the impact of the continued decline in coke prices, coking plants are actively digesting their inventories and demanding profits from upstream coal mines. After a period of operation, coke spot has not only successfully stopped falling, but also some enterprises have begun to raise coke prices by 100 CNY/ton. The phenomenon of cargo pulling by automobile is very hot. As the downstream of coke, in the early stage of the steel plant, the enthusiasm of purchasing coke has been on the low side because of the high and medium stocks. In addition, in March, some blast furnaces were in a state of limited production and less demand for burden, which led to a downward trend in coke prices. Until last week, coke prices stopped falling and began to rise. The mood of coke bullishness in the market became stronger and stronger. Enterprises, driven by environmental protection, increased the bottom gas of rising. What is the basis for success in this round of coke increase?

First, the profit margin of downstream steel mills has increased. As steel prices continue to rise, the profit per ton of screw steel has reached more than 600 yuan per ton. In the current situation, steel mills are not willing to continue to suppress coke, and the success rate of coking enterprises to increase is more acceptable downstream.

Secondly, the environmental protection work has put forward new requirements for the production restriction of coking enterprises once again. The environmental protection work in Linfen area requires that coking enterprises which are not up to Class D standard will adopt steaming furnace measures directly, and the environmental protection intensity will be tightened again, which makes the coke supply hopefully tightened again.

Third, coking enterprises have increased their willingness to take the initiative to limit production. When the enterprise's own production is in a loss situation, the willingness of the enterprise to take the initiative to limit production will be strengthened. Previous coking enterprises are mainly de-stocking, active delivery to the downstream, but after a period of time, the internal inventory of the coking plant has declined to a certain extent, which also provides sufficient space for the subsequent price increase of coke. In addition, the possibility of joint production limit and price guarantee in coking industry exists. As the coke price in the early period has indeed reached the profit and loss line of the enterprise, the situation faced by the whole coking industry is the same. For the coking plant, the impact of joint production limit and price guarantee is positive.

However, at present, despite the reduction of coke stocks upstream, port stocks and steel mill stocks have not been effectively digested in the short term. The coke stocks in Rizhao Port and Qingdao Port are in full storage, and the quantity of coke stocks is increasing continuously. This has certain resistance to coke rising. Especially from the point of view of coke export situation, the quantity of coke exported by our country is increasing dramatically, so it is unrealistic to rely on overseas demand to digest port coke. On the other hand, the steel plant still purchases coke on demand, and the actual consumption demand of coke has not been fully released. Once the demand is released effectively, the port coke inventory will inevitably decline considerably. Therefore, the space for coke rising in the short term depends on the speed of coke digestion by the steel plant itself.

According to the data of automobile market of Quick Cheng Logistics Statistics, the price of automobile freight for coke from Luliang and Changzhi, the main producing areas, to the port rose relatively on April 15, ranging from 5 yuan to 15 CNY/ton. Many traders in the port inventory is very high, still actively pulling, we can see that this part of the traders are generally optimistic about the future coke. It is expected that this week's increase of coke by 100 yuan per ton by coke enterprises will be accepted by downstream enterprises.