Weak operation of coking coal market

Recently, with the price of coke falling by 50 CNY/ton, the profit of coke enterprises has been reduced, and the raw material coking coal has been suppressed, and the coking coal inventory has slightly accumulated. Data shows that as of October 25, the total inventory of coking coal in the coking plant of the steel plant was 16.9833 million tons, with an increase of 429500 tons in the weekly to environmental ratio. Among them, the coke inventory of the steel plant is 8.8612 million tons, with an increase of 319800 tons in the weekly to environmental ratio; the coke inventory of the coking plant is 8.121 million tons, with an increase of 109700 tons in the weekly to environmental ratio. According to the current situation, the inventory of steel plants and coking plants has increased, and the supply of coking coal is slightly loose. The supply of coking coal in China is abundant. Coking enterprises maintain profits by suppressing the price of coking coal, and the price of coking coal is expected to continue to decline in the later period. In recent years, the domestic coking coal market is dominated by price reduction sales.

Last week, the coke price was fully settled, and the low sulfur main coke continued to decline under pressure, with a cumulative decline of 90-100 CNY/ton. In some areas, the decline reached more than 100 yuan. Due to the further compression of the profits of the downstream coke enterprises, the upstream was forced to yield the profits, and the purchase price continued to decline in the short term. Downstream traders have low purchasing enthusiasm. Steel mills mainly purchase on demand and control the arrival of goods. The sales pressure of coke enterprises is on the rise. In the short term, or will continue to suppress raw material profits. The data shows that as of October 25, the operation rate of coke enterprises in China is 76.99%, and the weekly to environmental ratio is down by 1.02%; the operation rate of blast furnace in China is 63.54%, and the weekly to environmental ratio is flat. At present, the downstream steel market continues to be weak, and steel mills have a strong desire to suppress the price of coke. After the increase and decrease of 50 CNY/ton of coke last week, the profit of coke enterprises is only about 50 CNY/ton, but not to the point of loss. Coke enterprises will not take the initiative to stop production and limit production. It is expected that the start-up of coke enterprises will remain high before the heating season in mid November.

According to the latest monitoring data of express logistics, as of October 28, the freight price of the coking coal line from Lishi to Dingzhou, Baoding, decreased from 130 CNY/ton to 120 CNY/ton, with a decrease of 10 CNY/ton. The quantity of coking coal to Xuyang coking plant showed a significant decrease trend. In the context of limiting the operation of vehicles under the fifth five year plan, the freight of the line is still falling, which shows that the coking plant's purchase of coking coal is indeed negative. According to the market news, on October 29, the low sulfur main coke in some areas of Taiyuan dropped another 50 CNY/ton, and at present, the cumulative drop is 130 CNY/ton. At present, the factory acceptance of main coke (s0.6, g80) includes tax report of 1450 CNY/ton, and the quantity price is preferential. In 2019, in addition to the weak downstream demand, the high social inventory of coking coal has also become a key factor restricting the price of coking coal. This year, coking coal storage keeps accumulating. According to the inventory data of relevant organizations, only during the Spring Festival, coking coal storage decreased slightly. After the Spring Festival, coal mines began to return to work, coking coal overall inventory continued to rise. Latest statistics: as of the week of September 20, the total inventory of coking coal was 25961600 tons, an increase of 5.3125 million tons, a year-on-year increase of 27.06%. This year, due to the sharp rise in import volume, the port also kept accumulating its inventory. In the week of the 20th, the port's inventory was 6.77 million tons, an increase of 3.1934 million tons, or 90.55%. In terms of imported coal, the quantity of coking coal imported this year is also significantly higher than that of last year. According to the latest data released by the General Administration of customs, in August 2019, China imported 9.07 million tons of coking coal, a year-on-year increase of 29.6%, a month on month increase of 1.32 million tons, an increase of 17.03%. From January to August 2019, 52.99 million tons of coking coal were imported, up 19.8% year on year. To sum up, the low demand of high inventory of coking coal leads to the pressure bearing operation of coking coal price this year.