The main reasons for the continued fluctuations in the coke market

Looking at the changes in the coke market in the first 11 months of 2019: the price has fluctuated, falling from time to time, with more losses and less gains; the whole industry is in a downward fluctuating manner. The main reasons why the coke market continues to oscillate are:

First, environmental protection and limited production have caused changes in coke market demand. Air pollution in some areas of the country is severe this year. Therefore, efforts have been made to improve environmental protection. A group of iron and steel companies have been required to limit production and shift peak production. Constraints have been placed on the release of production capacity, reduced production, and reduced demand for coke. National Bureau of Statistics data show that in October 2019, China's pig iron output was 65.58 million tons, a year-on-year decrease of 2.7%; crude steel output was 81.52 million tons, a year-on-year decrease of 0.6%. Iron and steel enterprises reduce production, coke consumption declines, causing the coke market to fluctuate downward.

Second, changes in the steel market have driven coke prices up and down, and the market has fluctuated and fluctuated. Since the beginning of this year, the domestic steel market has continued to oscillate, the fluctuations have increased, and the frequency of oscillation has accelerated. The prices of some steel products sometimes fell several times a day, with a drop of more than a hundred yuan per ton, and sometimes they rose sharply. The market changes rapidly and directly affects the trend of the coke market. For example, in October, the price of steel in Shanghai fell by 80 CNY/ton to 140 CNY/ton, and the benefits of steel mills shrank. Therefore, most of them adopted the strategy of "control volume and suppress prices" in coke procurement, which caused the coke market to fall downward.

The third is affected by the market situation of iron and steel and other raw materials, the coke market is ups and downs. In the first half of this year, iron ore prices rose sharply, and the benefits of steel enterprises were swallowed up by iron ore price increases. Under this situation, steel mills try to keep coke purchase prices as low as possible to alleviate the pressure of rising costs. Therefore, the game of coke and steel companies increasing and decreasing coke prices is becoming increasingly fierce, and there seems to be no stopping.

The fourth is the release of coke production capacity. Overall, China's coke production capacity is excessive, and supply exceeds demand. Statistics show that in October, the total domestic coke output was 38.878 million tons, a year-on-year increase of 1.2%; from January to October, the cumulative domestic coke production was 39.829 million tons, a year-on-year increase of 5.6%. Coke prices have continued to fall, and some coking plants have fallen into losses before they began to reduce production and depots, thereby suppressing expectations of continued price reductions. In the long run, the coke market is still dominated by weakness.

With less than a month to go in 2019, the coke market will not change much. At present, steel mill coke inventory is relatively sufficient, and the willingness to make up stocks is not strong. Therefore, the coke market will be dominated by small fluctuations, and there is limited room for continued decline.