Supply and demand boom boosted coke futures to a new high in the year

Domestic coke prices have risen rapidly since May, and domestic coke futures prices have reached a new high. On May 25, the highest coke price hit 2362 CNY/ton in the main contract market. The biggest increase in the month was close to 15%, and the closing price reached a new high in the year. Spot coke followed the rise. According to Baichuan information data, domestic coke quoted 2035 CNY/ton on May 24, up 1.34% from the previous day, and the cumulative increase in the month reached 13.56%.

In addition, according to the Statistics Bureau news on May 24, according to the monitoring of market prices of 50 kinds of important means of production in 9 categories in 24 provinces (districts and municipalities) circulation field, 13 kinds of product prices rose, 29 kinds fell and 8 kinds were flat in mid-May 2019 compared with the first ten days of May. Among them, coke (secondary metallurgical coke) increased by 4.7% annually. In response, Chuancai Securities said that the supply and demand of coke had improved and that it was concerned about the release of port coke stocks. As for coke, after the implementation of the second round of coke increase, some coke enterprises in Shanxi launched the third round of increase, ranging from 50 yuan to 100 yuan per ton. At present, the basic position of coke is on the tighter side. At the demand side, the current steel mill maintains a high start-up rate, coke consumption in the steel mill continues to rise, inventory in the mill declines, and the willingness to replenish the warehouse is more positive. At the supply side, the central environmental protection supervision group recently issued documents, dispatching special personnel to Shanxi, Shaanxi, Jiangsu and other places to inspect and supervise the rectification, and there is a tightening expectation at the coke supply side, but at present. In view of the situation, the impact of supervision on coke production is still relatively small. According to Fenwei energy data, the recent start-up rate of sample coke enterprises has only slightly decreased by 0.2% annually, and the follow-up impact of supervision will continue to follow up. Overall, coke supply and demand are tightening, and coke prices will remain strong in the short term. However, it should be noted that the current port coke stocks are still relatively high, and most of them are high-priced resources in the early stage. Follow-up coke price increases will promote the port stock to enter the market, which may cause high fluctuations in coke prices. It is suggested that continuous attention be paid to the release of port coke stocks.

Guotai Jun'an Securities said that the implementation of coke price increase was smooth and there was limited room for further price increase. As of May 17, 2019, the price of Shanxi main coking coal depot in Jingtang Port was raised by 1770 yuan per ton, which was unchanged from last week. The total coking coal stock in Sangang was 3.99 million tons (+6.40%). The flat warehouse price of first-class metallurgical coke is 2220 yuan per ton (+0.23%) and the coke stock of 110 sample steel mills is 4444.48 million tons. The start-up rate of coke enterprises with 2 million tons or more is 83.41% (-0.20 percentage points). Coke inventory continues to decline, environmental protection is expected to become stricter, price increases are implemented smoothly, but it is expected that the follow-up space is limited; the tight supply of coke coal is still difficult to change, price increases are constrained by high inventory in the port.

In fact, the performance of Listed Companies in coke industry has been improving continuously. According to the statistics of the Securities Daily, 20 of the 30 listed companies in the coke field achieved a year-on-year increase in net profit of the shareholders belonging to the parent company in 2018, accounting for nearly 70% of the total. Among them, the net profits of Shanxi Coking, Yunnan Coal Energy, ST Antai, International Industries, Kailuan Stock and Baotailong, which belong to the shareholders of the parent company, doubled year-on-year in 2018. In addition, 20 of the above-mentioned companies reported a year-on-year increase in net profits of shareholders belonging to the parent company in the first quarter of 2019, accounting for nearly 70%. According to the statistics of Jinyi, there are 14 companies whose annual report in 2018 and quarterly report in 2019 belong to the shareholders of the parent company, which realize double growth, showing strong growth.

Driven by performance+price increase, the attention of institutions to coke component stocks has gradually increased in recent years.