Is coke starting to rebound a flash in the pan or a sustained rebound?

Coke futures contracts have been declining since August. After opening on August 26, coke prices continued to fall with the black system until August 28, when coke began to rebound. As of August 28, the main coke price in 2001 was 1887 CNY/ton, up about 0.45%. What caused this wave of coke market? Is it a flash in the pan or a sustained recovery? The impact of environmental production restriction on coke enterprises has been weakened obviously since coke enterprises started to rebound, and the stock accumulation of steel mills this year. Even though there are certain production restriction behaviors in some areas during some time periods (prolonging coking time), the actual coke output has not been affected because of the difficulty of coke production monitoring. Data show that the cumulative coke output in China from January to July 2019 was 274 million tons, an increase of 6.7% over the same period last year, of which the national coke output in July was 39.612 million tons, an increase of 5.9% over the same period last year. Previous Shanxi coke enterprises were limited by the start of the Second Youth League. After the end of the Youth League last Tuesday, coke enterprises began to gradually rise. As of August 23, the start rate of coke enterprises in China was about 76.13%, and the cycle ratio increased by 1.46%. With the recovery of start-up and the weakening downstream steel market, demand gradually weakened and coke stocks began to accumulate. At present, the coke stock of steel mills is in the middle and high level. As of August 23, the total coke stock of domestic sample steel mills was 45895,000 tons, with an increase of 419,000 tons. In addition, the port coke inventory is also at a historical high of 4.68 million tons. However, it should be noted that the port coke inventory is basically the spot coke with mixed warehouse receipt quality. The liquidity is low. During the downturn of the market, the port coke inventory has little impact on the spot coke market.

Terminal demand may increase, which is expected to stop the decline and stabilize

Although the overall mood of the market at this stage is pessimistic, the market generally does not look forward to the future of the real estate industry to continue to pull the steel industry, but the rapid decline of terminal demand in the short term is still unrealistic. The rapid decline of steel prices in the off-season has led to a rapid shrinkage of steel mill profits and a drop in pig iron production. The data show that the national pig iron output in January-July 2019 was 473.444 million tons, of which the national pig iron output in July was 68.314 million tons, with a monthly decrease of 2.6%. However, with the arrival of the traditional consumption season in September, terminal demand may improve, and the improvement of terminal demand will gradually transmit to the coke market, which may stop falling and stabilize. At present, the production limit of Tangshan Steel Works is weakened in September. If the later market limit is no longer strengthened, the improvement of terminal demand will be quickly transmitted to the coke market because of the low coke inventory of coke enterprises at the present stage. However, as the National Day approached, the expectation of stricter production restriction was greater. It is difficult to assess the impact of late production restriction and environmental protection production restriction. It is suggested that we pay close attention to the implementation of environmental protection production restriction in steel and coke enterprises and the situation of production restriction in coke enterprises. Overall, comprehensive view, the first round of spot coke lifting and falling so rapidly is the result of the two-way effect of supply and demand. Although coke stocks in coke enterprises are at a low level at present, the overall start-up has gradually rebounded, and the stock of downstream steel plants is still high, the price of superimposed steel keeps falling, and the profit of steel plants is compressed. There is nothing wrong with the lower price of coke. With the arrival of the peak season of traditional steel consumption in September, the speed of de-stocking in steel society has increased in the past two weeks, and steel prices are expected to rebound at the bottom, which will also lead to the stabilization of coke prices and the rebound of market sentiment, which is an expression of optimism. It should be noted that with the approaching of National Day, the environmental protection and production restriction of steel and coke enterprises around the country is expected to increase. It is suggested that close attention be paid to the promulgation and implementation of the national day environmental protection and production restriction policies in various regions.