Latest research report on coking coal and coke

In recent years, the market of double coke has been in a weak position, and the spot price has declined continuously. With the implementation of the policy of "peak shifting production in autumn and winter", there is high uncertainty in the future changes of the coal char market. In order to get a detailed understanding of the current situation of the coal and coke market and the industry policies that may be faced in the later stage, our department conducts a field visit to some coal and coke related enterprises in Shanxi Province. Now, the survey is summarized as follows:

(1) coke: at present, the coke sales pressure of coking enterprises is generally large, not only the medium and large-scale coke enterprises have stock accumulation, but also most small-scale coke enterprises have stock accumulation. There are few vehicles waiting for delivery in the visited enterprises, so it can be seen that the delivery situation is poor. Through communication with enterprises, there is a significant reduction in new orders in the downstream and continuous decline in coke price, which also leads to a weak enthusiasm for procurement in the downstream. After two rounds of market price reduction (totaling 100 CNY/ton), most of coke enterprises are in a low profit situation, and some enterprises suffer from inventory pressure and price overruns. During the investigation, stimulated by the news that the third round of price reduction of steel mills in Hebei Province is 50 CNY/ton, some coke enterprises are eager to adjust their strategy for shipment. As for the replacement of new and old capacity in Shanxi, it is reported that most of the new capacity construction projects of coke enterprises that have obtained relevant procedures in the early stage are in the stage of infrastructure construction and progress is slow.

As the "environmental impact assessment" procedures have not been obtained, the enterprise is worried about the later policy changes, and dare not resolutely accelerate the construction progress. Taking Linfen as an example, most of the newly built production capacity of "one city, three districts" coke enterprises settled in "Fushan Industrial Park", which has not started construction at present. In the future, it is expected that most new capacity of coke enterprises will be put into production by the end of 2020 or 2021. In addition, the coking enterprises previously shut down in Linfen area are currently in a state of shutdown, and have basically implemented the elimination of production capacity, and the unfinished production capacity of enterprises in production has also been removed from the approved production capacity. Before September 30, some new production capacity in Yuncheng district was put into production. After that, it is hard to release new production capacity this year. According to a coke enterprise, the coking market in Southwest China is performing well, with a profit of about 300 yuan per ton of coke. Some coke enterprises in Shanxi plan to invest and build factories in Yunnan and Guizhou. At present, the project is under negotiation. In terms of "environmental protection and production restriction", it is generally believed that the production restriction is relaxed and enterprises are little affected by environmental protection, but not all of them. From the perspective of environmental protection policies, coke enterprises' production restriction has been relaxed compared with the previous years, but the implementation efforts should be obviously strict. At present, the implementation of the environmental protection policy of the coking industry implements the "one plant, one policy" system, under the premise of differentiated treatment, the supervision of key enterprises is also increasing. 

(2) coking coal: our department discussed with a coking coal trading enterprise and learned that at present, the supply of high sulfur coal resources in Luliang area is tight, and the price reduction is very small (at present, the price is about 950 CNY/ton). In the near future, the price of low sulfur resources (at present, the price is about 1380 CNY/ton) has been falling continuously (the highest price in the year has dropped by 200 CNY/ton), which is mainly because the price of low sulfur main coking coal is obviously on the high side this year, the market demand is weak, and the coal mine makes profits to the downstream under its own inventory pressure. However, the price difference between high and low sulfur resources is still in a large range, so high sulfur coal is still favored by the market. At present, the supply of coking coal is mainly mine mouth coal washing, and the annual washing capacity of the investigated enterprises is 2 million tons, but at present, the "washing and blending" is mixed, and the business volume is obviously contracted compared with last year. According to the analysis of enterprises, only when the price of low sulfur coal continues to fall by about 50-100 yuan will the price of high sulfur coal be significantly suppressed, and then the price of high sulfur coal will also fall substantially. However, after entering the winter, coke enterprises have the demand for raw material stock, and the space for coal price to fall is very limited. Especially high sulfur coal, it is difficult to continue to decline in the year. At present, most coke enterprises in Linfen require "clean coal into the plant", and the coal washing workshop in the plant is in a stagnant state. Most of the local independent coal washing enterprises have withdrawn from the market, and the cost of coking enterprises directly purchasing a single clean coal from the coal mine and then mixing it is higher than before.

Market analysis: according to the research, our department believes that the third round of price reduction of the mainstream price in the coke market is expected to be implemented in the near future, at which time, most coke enterprises in Shanxi will have a slight loss in coking profits. However, in the context of the implementation of the policy of "peak shifting production in autumn and winter", coke enterprises will have the situation of active production restriction in coking profit loss, and then the supply and demand of Coke will gradually balance. Considering the influence of seasonal factors, there is limited space for the price of coke to decline, and the rate will be stable until the middle of December. The comprehensive analysis of profit transmission in various links of black system shows that the change of coking coal price is the key factor. If coking coal price stabilizes, the price of Coke will stop falling because coking profit of coke enterprises does not have a long-term negative consideration. Our analysis shows that the market is at the key point mentioned above. In the near future, the import coal policy will be tightened, the domestic coal production tasks will be completed soon, and the supply rate of coking coal will shrink. After entering December, the downstream coking enterprises will start to store and replenish coking coal in winter until the consumption can meet the demand of 20 days to 1 month. In this way, the coking coal price "stop falling" is more definite. Then, the price of coke is about three rounds (the cumulative decline of 150 CNY/ton) to complete the decline trend. Combined with the analysis of coke price trend over the years, it is difficult for coke price to rise continuously until December.