Loose short-term coke supply suppresses price rise

This week, the black system opened the way to decline. Iron ore has closed in four clouds this week because of the large increase in the previous period, while coke began to fall after the March data released by the National Bureau of Statistics on the 17th. The price of coke 1909 contract closed yesterday at 212 CNY/ton, a decline of 1.88%. Why on earth did coke fall? The latest data from the National Bureau of Statistics show that the total coke output in China from January to March 2019 was 112.17 million tons, an increase of 7.3% over the same period of last year, of which the coke output in March was 38.1 million tons, an increase of 5.4% over the same period of last year. It can be seen that although in March Shanxi, Hebei and other parts of the coke enterprises to implement the policy of environmental protection output restriction, but coke production still increased significantly. In addition, the data show that from the end of March, the start-up rate of sample coke enterprises is still rising. As of April 12, the start-up rate of coke enterprises is 80.97%, and the cycle is up 0.2%. Therefore, in a comprehensive view, coke supply will continue to be loose in the short term, which will suppress the space for coke price to rise to a certain extent. 

From the point of view of inventory, the total coke inventory is still at the high level. The data show that as of April 12, the coke inventory of 110 sample steel plants in China was 46524,000 tons, and that of 100 independent coking plants in China was 769,000 tons. Although the inventory cycle ratio of steel and coking plants has decreased, the inventory is still at a medium to high level. As of April 12, the total inventory of Tianjin Port, Lianyungang Port, Rizhao Port and Qingdao Port was 4.24 million tons, reaching the highest level in recent years. Therefore, at this stage, although the downstream demand has started, but the demand is not as expected, coupled with the pre-black industry chain in all aspects of high inventory, making the total coke inventory is still at a medium to high level. 

After April, the Spring Festival and the "two sessions" and other factors were eliminated, a large number of coal mines began to resume production, and the situation of shortage of coking coal resources was improved. Since March, the repeated pressure price of coke has been transmitted to coking coal in steel mills. The price of high-price coal has been lowered in the earlier period, and the price of some low-sulfur main coking coal has been lowered by 140 CNY/ton at a higher point. However, it should be noted that at the end of March, the Changxie price of coking coal in Shanxi mainstream mines remained unchanged in the second quarter, coupled with the difficulty of clearing Australian coal customs, it seems that there is limited space for the decline of coking coal prices in the later period. 

At present, the high inventory status of coke is gradually improving, but the continuous high start-up of coke makes the coke supply still loose, high inventory and high start-up restrain the rising space of coke. From the raw material side, the reform of the supply side of coking coal is obviously stronger than that of the coking industry, which to some extent limits the falling space of coke. Overall, coke is attacked by upstream and downstream, and its position is relatively passive. After price stabilization at this stage, coke is also in a dilemma of rising and falling. Considering that the later stage of blast furnace production or will increase, stimulating coke demand, it is expected that Coke will rise more likely. However, at present, the inventory is high and the future market situation is variable. Therefore, it is suggested to pay close attention to the inventory changes in all aspects of coke.