The price of coke will be stable in 2020

2019 is near the end. This year, the coke market as a whole fell in shock and rebounded from the bottom in mid November, but there was no obvious sign of stabilization and recovery. It is understood that since mid to late November, the market price of coke in some regions in China has been rising and falling, with constant fluctuations. Take the week from November 16 to November 23 as an example, the price of coke in Yunnan Guizhou region dropped 80 CNY/ton, and a few representative steel mills and Handan steel mills in Shanxi Province proposed to reduce 50 CNY/ton to coke enterprises. At the same time, Shanxi coke enterprises sent letters to the steel mills to increase the ex factory price of coke by 50 CNY/ton, but after many days of game, the price in most regions was still stable. On January 2, the coke market started with a downward trend. On the same day, the price of secondary metallurgical coke in Tangshan was 2065 CNY/ton, down 50 CNY/ton; the ex factory tax price of secondary metallurgical coke in Qitaihe, Heilongjiang was 2070 CNY/ton, down 100 CNY/ton. The coke market started disadvantageously, because the coke stock of the steel plant increased, the willingness to replenish the stock was not strong, and the demand for coke decreased. Coking enterprises accept the price reduction of coke, and traders have the phenomenon of price comparison and price reduction.

The coke market enters the downward channel of shock, and the coke price of the coke enterprises is reduced by 200 CNY/ton. The operation rate of coke enterprises is relatively high. Coke enterprises in Xuzhou, Jiangsu, Shaanxi and other places gradually increase production. The coke inventory of steel enterprises is in the middle and high position, and the willingness to suppress the raw material price is enhanced. Middlemen are not optimistic about the future market, and the purchase volume of coke continues to shrink. The output of crude steel and pig iron is decreasing, while the output of coke is increasing. This "one reduction and one increase" resulted in the supply of coke exceeding the demand, resulting in the fluctuation of the coke market price throughout the year. From the last ten days of April to may, the coke market gradually got rid of the continuous weak and sluggish running trend, stopped the decline and rebounded, and rose in shock. On April 28, the domestic coke market price generally rose. Coking enterprises in Shanxi, Inner Mongolia, Shandong, Hebei and other places have successively raised the sales price of coke, which is accepted by most steel mills, driving the spot price of coke market generally to keep up with the rise. However, from the middle and late June to July, the market price of coke began to fall again.

The monthly pricing in central and South China represents that the prices of coke plates in July are all reduced by 140 CNY/ton; the price of coke in the first half of July in Southwest China is reduced by 50 CNY/ton. By the middle of July, after the continuous decline of coke price, the profits of coking enterprises were continuously compressed, close to the break even point, and a few coke enterprises lost money. After that, some coke enterprises made a small increase in the quotation of traders, and the price of coke stopped falling and stabilized. At the end of July and the beginning of August, the price of domestic coke market tends to rise steadily, with the first round of price increase landing and the second round of price increase of 100 CNY/ton. However, during this period, the domestic steel market continued to be weak, and the profits of steel mills were greatly reduced, which could not support the price rise requirements of coke enterprises. At the end of August and the beginning of September, the market price of coke continued to fall. Among them, the price of coke in East China, North China and Northeast China generally fell by 100 CNY/ton, with a cumulative drop of 200 CNY/ton since the price reduction at the end of August. This weakness and downturn in the coke market continued into November. During the week from November 1 to November 8, the domestic coke price dropped by 50 CNY/ton to 100 CNY/ton. Over the first 11 months of 2019, the coke market changes.

The prices fluctuate from time to time, from more to less, and the whole is in a fluctuating downward channel. The main reasons for the continuous fluctuation of the coke market are as follows: first, environmental protection and production restriction have resulted in the change of the coke market demand. This year, air pollution is relatively serious in some areas of the country. Therefore, efforts have been intensified to improve environmental protection. A number of iron and steel enterprises have been required to limit production and stagger peak production. The release of production capacity has been restricted, the output has been reduced, and the demand for coke has been reduced. According to the data of the National Bureau of statistics, in October 2019, the output of pig iron in China was 65.58 million tons, down 2.7% year on year; the output of crude steel was 81.52 million tons, down 0.6% year on year. Iron and steel enterprises reduce production and coke consumption, leading to a downward shock in the coke market. The second is the change of steel market, which drives the price of coke up and down, and the market fluctuates. Since the beginning of this year, the domestic steel market has continued to fluctuate, increasing the range of ups and downs, and accelerating the frequency of shocks. Sometimes the price of some kinds of steel falls several times a day, with a drop of more than 100 yuan per ton. Sometimes it rises sharply, and the market changes rapidly, which directly affects the market trend of coke market.

For example, in October, the steel price in Shanghai fell by 80 CNY/ton to 140 CNY/ton, and the benefits of steel mills contracted. Therefore, the strategy of "controlling quantity and reducing price" was mostly adopted in coke procurement, which made the coke market fluctuate downward. The third reason is that the coke market has ups and downs due to the influence of iron ore and other steel raw materials market. In the first half of this year, the price of iron ore rose sharply, and the benefits of steel enterprises were swallowed up by the rising price of iron ore. In this situation, the steel mills try to reduce the purchase price of coke as much as possible to relieve the pressure of rising cost. Therefore, the game between coke and steel enterprises around the rise and fall of coke price is becoming more and more intense, which seems to have no stop. The fourth is the capacity release of coke enterprises. In general, China's coke production capacity is surplus, and supply is greater than demand. Statistics show that in October, the total output of domestic coke was 38.783 million tons, up 1.2% year on year; from January to October, the cumulative output of domestic coke was 39.2809 million tons, up 5.6% year on year. The price of coke continued to fall, and some coking plants have fallen into losses before they began to reduce production and storage, thus restraining the expectation of continued price reduction. In the long run, the coke market is still weak. Less than one month will pass in 2019, and the coke market will not change much. At present, the coke stock of steel plant is relatively sufficient, most of which are "buy as you go", and the willingness to replenish the stock is not strong.