Coking coal third quarter or pressure

In the first half of this year, although coking coal price has been revised back, it still maintains a relatively strong position in the black industry chain. However, I believe that this relatively strong situation will change in the third quarter, because the supply and demand of coking coal is basically better than in the first half of the year. In the second half of the year, coking coal will experience a wave of price decline in the third quarter brought about by excess supply. The downstream demand for coking coal mainly depends on the production of downstream coke. In the final analysis, it depends on the production of steel mills. This year, the environmental protection and production restriction tasks of downstream steel mills and coking plants are gradually increasing, which has a negative impact on the demand for coking coal. On June 23, the Tangshan Municipal Government issued the Notice on Stopping and Limiting the Production of Iron and Steel Enterprises in the City, which calls for increasing the intensity of stopping and limiting the production of iron and steel enterprises. From now on to the end of July, six steel mills with a performance evaluation of category A will be limited by 20%, other iron and steel enterprises in the city will be limited by no less than 50%, and blast furnaces will be stopped. According to the author's estimation, if the production restriction is strictly implemented, the average pig iron output in Tangshan City will decrease by 90,000-140,000 tons in July, which will directly lead to an average reduction of 40,000-60,000 tons in coke demand in Tangshan Iron and Steel Enterprises in July, corresponding to a decline of 4-6% in the demand for metallurgical coke in the whole country.

If Beijing, Tianjin, Hebei and other surrounding areas also follow Tangshan City to increase environmental protection codes, then the demand for metallurgical coke will decline more sharply. If the coke industry is facing a decline in demand, its processing profit will inevitably decline rapidly, which will lead to the reduction of coke industry output, and ultimately affect the demand for coking coal. Therefore, the downstream demand cycle of coking coal in the third quarter is more likely to decline than that in the previous quarter, but the extent of decline needs to be further confirmed by the specific implementation of production restriction. In the first half of this year, the output of coking coal mine has not been effectively released. Due to the frequent occurrence of coal mine accidents around the Spring Festival, frequent safety inspections and the superimposition of environmental protection inspections in water areas, some coking coal mines have reduced production or even stopped production for safety or environmental protection rectification. According to the output data of coking coal in Fenwei energy province, the output of coking coal in China totaled 460 million tons from January to May, which increased by 3.74% year on year. Compared with the 9.74% increase in pig iron production and 9.4% increase in coke production from January to May, the 3.74% increase in coke production is on the low side, which is also the direct reason for the relatively strong coking coal price in the first half of the year. From the point of view of import side, although the policy of importing coal has been tightened, the import volume of coking coal did not decrease from January to May, but increased considerably. From January to May, China imported 592,000 tons of coking coal, a cumulative increase of 30% over the same period last year, and Australia imported 45% more coking coal. The increase of import volume exceeding expectation has suppressed the price of domestic coking coal market, especially high quality blended coking coal market, but it is not comparable with domestic coking coal output in scale. Overall, the import growth of coking coal was better than expected in the first half of the year, but the output release of domestic coking coal mines was impacted, and this situation will change with the gradual completion of coal mine safety and environmental protection transformation. At present, the start-up rate of sample coking coal mines has been restored to 110% neutral level from the low level of about 100% in the previous period. If the factors that may lead to the stricter inspection of coal mine safety caused by the celebration of National Day are not taken into account, the coking coal mines will continue to stabilize at this start-up rate level, and the output ring ratio will increase significantly in the first half of the year. At present, the stock accumulation of some coking blending coal is obvious, and the stock pressure presents a transmission process from downstream coking plants, steel plants, midstream ports to coal mines of origin, which is also one of the main reasons for the price pressure of coking coal. The author believes that the good supply and demand of coking coal market in the third quarter has been completely digested. Compared with the previous quarter, demand is weaker and supply is increasing, so price pressure must exist objectively. However, there are some doubts about whether the decline of coking coal price can be opened up: first, the actual production restriction and landing situation downstream; second, whether the imported coking coal will change again in the second half of the year; third, when will the National Day celebrations affect the production of coal mines?