In August, with the slow recovery of demand for building materials, the start of the blast furnace gradually reached a high level, accompanied by the continuous increase in demand for coke. After three consecutive rounds of price cuts of 150 yuan/ton, coke enterprises began to increase coke prices as inventories continued to fall. At the end of the month, they barely landed the first round of 50 yuan/ton increase. As of August 24, the first-class metallurgical coke from Tangshan, Hebei, was quoted at 1,900 yuan/ton, and the first-class metallurgical coke from Linfen, Shanxi was quoted at 1,690 yuan/ton.

Although the overall supply and demand of coke is tight, the increase in coke prices is not easy to achieve, mainly because: on the one hand, the profit of steel mills is less than 100 yuan, and the cost pressure is relatively high, and there is serious resistance to the increase in raw materials; The overall coke inventory is high, and the willingness to replenish the coke inventory in the short term is not strong, so as to consume the inventory and resist the rise of coke enterprises. In terms of ports, due to the large price difference between futures and current prices, it is possible to obtain predictable and stable profits. In the early stage, there are more ports. In the later period, futures adjustments and arbitrage space disappear, and the speed and number of port traders have returned to low levels accordingly. Futures prices fell sharply after the main month change, and currently maintains a range of oscillations, waiting for further guidance from the spot market.

It is difficult for coke enterprises to expand profits

Under the influence of high profits, coking companies are doing their best to produce. At the same time, because the downstream blast furnace has started to a high level, the demand space has not increased much. Superimposed on the high coke inventory of steel plants, the supply and demand of black upstream and downstream are gradually balanced. The strong bargaining power of coke companies in the industrial chain has been severely weakened. The price increase of coke is not as smooth as the previous period, and the profit expansion of coke companies will encounter strong resistance in the later period. At the same time, the profits of steel mills have reached historical lows, and the room for tolerable coke price increases is very narrow. If steel prices cannot rise significantly, the current profits of coke companies will continue to be maintained; if the market outlook for finished products is less than expected, the decline in steel prices will also drive coke prices down, and the profits of coke companies will further decline.

In short, the profits of coke companies depend on the sales and sales prices of finished materials. In the foreseeable September, the probability of the price of coke continues to rise is small, and profits will remain at the current situation.

High start of coke oven and blast furnace

As for the start of coke ovens, stimulated by high profits, the capacity utilization rate of coke ovens continued to rise in August. The average daily output of 100 independent coking companies also increased from 379,900 tons at the beginning of the month to 390,500 tons at the end of the month. The high production of coke still does not meet the current high demand. In the state of tight supply and demand, coke companies are maintaining high profits and continue to increase coke prices to squeeze the profits of steel plants. At the same time, coke companies are doing everything possible to fully start. Therefore, if the coke companies can guarantee a profit of 100 yuan, the start of the coke companies will remain high and try to produce more coke. The high start will be the norm in September.

In terms of blast furnace start-ups, the capacity utilization rate of steel mills' blast furnaces remained high, mainly because the steel mills accounted for 95.24% of their profits, which can be said to be the profit of the entire industry. Although the profit is low, it can be produced if it is profitable, and it is the main phenomenon to expand the overall profit through the scale of sales. As long as the steel mill is profitable, the steel mill will maintain high production. If steel prices fall and undermine the current profit structure, then the blast furnace start of steel mills may fall. Therefore, only when steel plants remain profitable can there be a shortage of coke demand. Once steel plants start to lose money, coke may become surplus.

Inventory is the embodiment of the steel coke game

In terms of ports, arbitrage in the coking period at the beginning of the month has relatively good profits, and the enthusiasm for trading ports is relatively high. As futures prices fall, arbitrage profits have shrunk and port resources have decreased. As for coke companies, after three rounds of coke price cuts, steel mills actively replenish their inventory. At the same time, speculative demand from traders has increased rapidly, resulting in a relatively low coke inventory of coke companies to continue to decline. In terms of steel mills, coke inventories have continued to decrease, mainly because steel mills resisted coking companies’ increase in coke prices, actively consumed inventory, and passively accepted coke companies’ supply.

On the whole, August is the most intense month for the steel coke game. Steel mills reduce their purchases by consuming inventory and suppress coke prices. In the steel coke game, traders increase speculative purchases at low levels. The first increase in coke has already landed. In the later period, with the rising coke price, the port resources are mainly based on just-needed procurement; and the steel mills will continue the current strategy of eliminating coke to resist the increase in coke prices until the inventory reaches a low level. Therefore, the presentation of inventory will be the most direct presentation of the results of the steel coke game.

In short, although the coke supply is slightly tight, the low profits of steel mills have built a ceiling for the rise of coke prices. At present, coke prices are more likely to fall rather than rise, mainly because: on the one hand, under the state of loose environmental protection policies, coke production capacity continues to be released and output continues to increase; on the other hand, high inventories and low profits in steel mills hinder coke Prices rose further. Therefore, when supply and demand are both booming in September, spot prices are more likely to maintain high oscillations until the end of the peak season.