The coke industry is not optimistic

After experiencing a sharp decline in the previous period, the recent coke ** price continued to weaken the adjustment, the main 1405 contract price has dropped to 1600 yuan / ton line, the market outlook has become a focus of attention. Although the current macroeconomic data is relatively warm, the coke supply pressure has increased and the demand is not optimistic. The weak price is hard to change.

Spot upside is limited. The domestic coke market has remained stable in the near-term as a whole, and local markets have risen slightly with stable transactions. In the rebound of the steel market and stimulated by the downstream demand, coke market prices in the northern region have begun to rise at different levels since the end of last month, and coking companies' prices have risen by 20-30 yuan/ton, and steel mills have received better goods. As a whole, the coke market mentality has improved, but the local coke price increases are not strong, and the market is expected to remain stable, with limited room for short-term upside.

The contradiction between the supply and demand in the steel market is still in the recent period. Steel prices are running weakly. Downstream steel companies are more cautious in purchasing, and steel exports have dropped significantly. Market confidence is insufficient. On the supply side, the latest data from the China Iron and Steel Association showed that in mid-October, the key enterprises’ daily output of crude steel was 1,717,700 tons, which fell by 2.97% compared to the previous period. The estimated daily output of crude steel in the country was 2.1686 million tons, which fell by 1% compared to the previous period. Domestic crude steel production began to decline in early October, but the overall operation is still at a high level. As the steel price fell significantly from the previous period, and the raw material prices in the upper reaches remained firm, the steel mills returned to the state of loss. In terms of inventory, the steel trade enterprises have a clear willingness to reduce their inventory, and social inventories continue to decline. However, the pressure on stockpiles has turned to steel mills, and there is a greater possibility that the steel mills will be forced to cut their output later. The unbalanced supply and demand relationship in the steel market made the “Jin 9 Silver 10” fail, and the real estate regulation pressure remained unabated. The north will enter the winter off-season demand, the market demand is not optimistic, and the steel market can hardly get rid of the weak running pattern.

Downstream demand is not optimistic Since coking coal market rebounded in August, the profits of coking plants have risen sharply. Under the stimulation of high profits, the operating rate of coking enterprises has risen significantly. According to statistics, from January to September 2013, the cumulative output of coke was 356 million tons, an increase of 7.2% year-on-year; September production was 40.29 million tons, a year-on-year increase of 14.3%. However, the overcapacity management of the downstream industries and the pressure of environmental protection policies will affect the demand for coke. The State Council has asked the steel industry to compress 80 million tons of total production capacity in the next five years. Hebei, a major producer of iron and steel, said that it would significantly reduce its steel production capacity to alleviate the problem of steel production in the province and serious air pollution in the surrounding areas. The reduction in steel production capacity will be directly transmitted to the upstream, and the coke industry will bear the brunt. The demand for the coke market will be significantly affected in the future.

In addition, the high inventory operation limits the price of coke. As of November 1, the coke inventories at the three ports of Tianjin Port, Lianyungang Port, and Rizhao Port totaled 2.953 million tons, which was at a high level in recent years. The recent rebound in steel prices may stimulate the need for restocking by individual steel mills, but considering the poor end-use demand, once the demand for restocking by steel mills is weakened, the conflict between supply and demand for coke will be highlighted.

In summary, the contradiction between supply and demand will continue to suppress steel prices, and the steel market is still difficult to be optimistic. Although the upstream raw materials are relatively firm, the losses of the steel mills have increased, and the pressure on stocks and losses has lately forced the steel mills to reduce their production further. In addition, the iron and steel industry is facing problems of capacity elimination and environmental protection and rectification. The mid-line view will drag down the demand for coke. Therefore, the price of coke is easy to fall or rise, and it can be short-sold in rallies.