Can coke rebound after two rounds of price reduction?

In the spot market, coke prices fell by two rounds, a drop of 200 CNY/ton, the price center of gravity declined, and the market mentality weakened. Considering that the current core driver of coke decline is the continued decline of steel prices, with the recent strengthening of steel prices, coke is expected to stop falling after two rounds of price reduction.

At present, the driving force of steel decline is gradually weakening. Judging from the continuous decline of stocks for several weeks, the supply and demand structure of steel has been significantly improved, and the peak season characteristics are beginning to appear. It can be said that the continuous decline in steel inventory has given steel prices confidence to stabilize.

From the point of view of the profit level of steel mills, the blast furnace profit is still over 200 CNY/ton at present, which means that the reduction of steel production in this round is not an arc furnace plant that does not consume coke, so the actual demand for coke is limited. So the expected impact of the weakening of coke demand, which is widely feared by the market, may be small. From this point of view, after two rounds of coke decline, the demand side has obviously warmed up, which has a positive effect on the pull of coke prices.

In the production area, the main production area of coke enterprises is Changxie Coke Co., Ltd. which mainly delivers the pre-order, and the inventory increases slightly compared with the pre-order period, but most of them are in a reasonable range. The market mentality is weak, and most of them are wait-and-see. The main reason is that Shanxi coking enterprises are gradually restoring the pre-production limit. After the end of the Second Youth League, the start-up rate of pre-production limit enterprises has been significantly increased. At present, only enterprises whose special emission value of atmospheric pollution does not meet the standards require production limit, which is only about 11 in number. The impact on overall coke supply is limited.

Coking enterprises have not yet taken the initiative to limit production because of profit compression. At present, the profits of coking enterprises in Shanxi Province, the main producing area, are still 50 CNY/ton-100 CNY/ton. Many enterprises still have room for price reduction due to poor shipment. It can be seen that the profit per ton of coke can still support the production of coking enterprises at present, considering the upstream situation. In terms of production conditions, steel mills are cautious about coke purchasing for the time being, mainly on-demand purchasing. From the level of coke inventory, the inventory of 100 sample coking enterprises in the upstream is only 232.4 million tons. At present, the inventory is at a low level in the year, but the overall inventory level of coke society has been at a high level since this year, mainly concentrated in steel mills and ports. Especially the port coke has been full for a long time, which leads to the situation that the price of coke has been facing a weak rise. But the situation has improved recently. In the aspect of port coke,

, when the overall demand of traders is not good, the phenomenon of price reduction sales increases, while the number of coke in Jigang decreases, which leads to the decrease of port coke inventory. As of September 6, the stock of Shandong two ports was 4.04 million tons, which was 130,000 tons less than that of 4.17 million tons at the end of August (27 August), and the progress of depot removal was accelerated. In the case of limited harbour, it is expected that the port inventory will continue to decline in the later period. In summary, the market base of coke's continued decline has weakened, and the downward space of coke price is very limited. In the case of relatively low price, the coke market in the later period will decline and breed a rise.