In mid-August, the domestic coke market price began to rise after the previous continuous decline. Whether this round of rising prices can continue and how the coke market prices will move in the next few months has become a hot topic of concern to the steel and raw material industries. A few days ago, a reporter from "China Metallurgical News" interviewed traders and industry insiders to analyze and discuss the coke market.

Coke prices began to rise in mid-August

In the first half of this year, due to the impact of the new crown pneumonia epidemic, domestic coke production and prices fell. According to data from the National Bureau of Statistics, in the first half of 2020, my country's coke production was 228.86 million tons, a decrease of 2.5% year-on-year, which was 1.6 percentage points narrower than the decline in the first quarter. Among them, the coke output of steel coking enterprises was 54.677 million tons, an increase of 0.8% year-on-year; the coke output of other coking enterprises was 174.009 million tons, a year-on-year decrease of 3.5%. Specific performance:

The domestic coke market price is at a low level. In the first half of the year, the average price of coke with a particle size greater than 40 mm was 1,816 yuan/ton, a year-on-year decrease of 10.7%, which was only 0.3% smaller than the first quarter; the average price of coke with a particle size of 25 mm to 40 mm was 1,734 yuan/ton , A year-on-year decrease of 11.9%, which was 0.7 percentage points smaller than the decline in the first quarter.

The pressure on coke sales has increased, and the efficiency of coke production enterprises has declined. Shanxi Province, the main coke production area, achieved operating income of 83.28 billion yuan in the coking industry in the first half of the year, a year-on-year decrease of 15.6%; and realized a total profit of 2.49 billion yuan, a year-on-year decrease of 57.7%. However, some coke manufacturers in other regions have no profits or even made losses.

In July, the coke market fluctuated in weakness and downturn, and prices fluctuated and fell. According to feedback from traders, the price of coke in the coke market fluctuated and fell in early July, and the purchasing prices of coke by iron and steel companies in Shanxi, Hebei, Shandong and other places continued to drop. Since then, for two consecutive weeks, the price of coke has been on a downward trend. Steel mills have lowered the purchase price of coke for three consecutive rounds, prompting an overall decline in coke market prices, with a total drop of 150 yuan/ton.

Under this circumstance, the willingness of coking companies to increase the ex-factory price of coking coal has increased significantly. In mid-August, the market price of coke began to rise for the first time, and the prices of secondary metallurgical coke in Shanxi, Hebei, Shandong, Inner Mongolia, Shaanxi, Heilongjiang and other places all increased by 50 yuan/ton. On August 14, the price of first-class metallurgical coke in Linfen, Shanxi was 1,800 yuan/ton, the price of semi-first-class metallurgical coke in Tangshan, Hebei was 1,860 yuan/ton, and the price of semi-first-class metallurgical coke in Rizhao Port was 1,900 yuan/ton.

Why is the price of coke rising?

What is the motivation for this round of coke market price increases? Industry analysts believe that: coke companies control the release of production capacity, output growth has narrowed, coke inventories have declined, manufacturers are optimistic about the market outlook, and their willingness to maintain prices has increased, driving up coke prices.

According to the National Bureau of Statistics, in July 2020, the national coke output was 39.97 million tons, an increase of 0.3% year-on-year; from January to July, the national coke output was 268.95 million tons, a year-on-year decrease of 2.0%. By mid-August, the coke inventory of 100 independent coking enterprises had fallen by 40,000 tons to 226,000 tons, of which the decline in North China was significant. Traders are optimistic about the market outlook and are highly motivated to inquire and obtain goods. In addition, the coke inventory of some steel plants is at a normally low level, and there is a need to purchase replenishment. The coke inventory of 80 steel mills fell by 236,000 tons to 5.668 million tons, of which the coke inventory of steel mills in North China dropped significantly. Some coking companies have slowed down their shipments. In addition, due to the rainy season, transportation in some areas is restricted, coke arrivals from steel plants have declined, and coke inventories have continued to decline. These superimposed effects gradually appeared, prompting the domestic coke market price to stop falling and rebound and began to rise.