Futures instruments can alleviate the difficulty of pushing up and pushing down

Recently, with the introduction of more stringent environmental control policies, the coal coke market has a tendency to weaken, which brings challenges to the coking enterprises in the "crack".

Futures Daily reporter learned at the recent International Conference on Coking Technology and Coke Market held in Taiyuan that in the first half of this year, the coking industry operated steadily on the whole, with a total coke output of 234.2 million tons, an increase of 6.7% over the previous year, especially in June, which was the highest in recent years. This is mainly driven by the growth of steel demand. However, driven by strong demand from steel mills, coke prices have generally declined, and the style of "big ups and downs" has not changed. There are three main reasons for the fluctuation of coke price:

First, the low concentration of coking industry, the serious surplus of production capacity and the unchanged homogenization competition with price as the main means; second, the mutually beneficial and win-win relationship between independent coking enterprises and end users has not really been established; third, environmental governance; The implementation of the policy of restricting production in different regions is quite different, and the regulation of supply and demand in the market lags behind. Cui Pijiang, president of China Coking Industry Association, said at the meeting.

According to reporters, the increasing consumption of scrap steel in steel mills will gradually reduce the demand for coke. It is worth mentioning that some coke spot enterprises use coke futures to manage risks and optimize production and operation in the face of large fluctuations in coke prices.

"In the coke industry chain, intermediate trade links are facing two-way risk exposures from upstream and downstream, especially strong demand for hedging, and most factors need to be considered." "In this context, there are more traders who carry out coke basis trading, and they can obtain stable income by buying spot and selling futures," Dou Hongzhen, black business unit of Yide futures, told reporters. It is worth noting that when the stock of ports is low, trading enterprises can also use the price difference between regions to optimize the basis trade. In mid-July of this year, coke spot price was in the period of rising, steel mills in East China took the lead in raising prices, but steel mills in Tangshan region had weak willingness to increase prices due to production restrictions. At that time, the spot price of the port was 2000 CNY/ton, and the price from Tangshan to the factory was 1900 CNY/ton. The price difference was 100 CNY/ton. "By contrast, the Tangshan area is better than the port in the basis trade. In addition, Tangshan is in the sales area, downstream steel mills have strong digestibility, enterprises can use the regional price difference to optimize the basis trade. Dou Hongzhen said.

An industry insider told reporters that if coking enterprises want to change the predicament of "squeezing up and pressing down", they can try to combine the current situation with the current situation. Through the futures market, enterprises can not only avoid the risk of market fluctuation, but also expand the sales channels. With the aggravation of price fluctuation, more and more coking enterprises enter the futures market to hedge risks. In the first eight months of this year, coke futures trading and position showed a steady growth, with a cumulative turnover of 38.98 million hands (unilateral, the same below); daily average turnover of 239.2 million hands, an increase of 0.97%; daily average position of 189.9 million hands, an increase of 14.62%; turnover rate decreased from 1.42 to 1.27 in the same period last year. Over the same period, coking coal futures totaled 16.68 million hands, with an average daily turnover of 102.3 million hands, down 45.84% from the same period last year.

Other data show that in the first eight months of this year, the average monthly trading customers of coke futures were 86.4 million, an increase of 0.73 million over the same period last year, an increase of 9.23%; the holding of corporate customers accounted for 34%, an increase compared with last year, and higher than the average level of the same period in history. Over the same period, coking coal futures participated in 57.2 million customers per month, a decrease of 27.1 million over the same period last year; corporate customers held 41% of positions, maintaining a high level.

"From the above data, we can see that more and more enterprises concerned are aware of the importance of using futures tools to manage risks." Shanxi coke futures price discovery and hedging function can not only help related enterprises avoid market risks and improve their ability to resist risks, but also help enterprises grasp market trends timely and accurately, and enhance the predictability and scientificity of enterprise decision-making.

As one industry insider said: "After experiencing large fluctuations in the market, coal coke enterprises will be more aware of the importance of futures instruments, in the case of large price fluctuations, enterprises will be more active in using futures instruments for hedging."