After the long Spring Festival holiday, the black futures varieties were generally strong. The main contract price of rebar broke through the high point in December 2020, and the main contract for hot rolled and iron ore set a new historical high. Coke has become the weakest link in the black industry chain. With the opening of the post-holiday spot reduction window, futures prices have continued to drop after a short spike. As of now, the low point of the disk price has fallen from the high point of early 2020. Around 700 yuan/ton.

The unexpected accumulation of coke inventories after the Spring Festival is the direct cause of the continuous decline in coke. According to statistics from relevant agencies, the large amount of new coking capacity put in from January to February did not put pressure on current supply. However, as the coking capacity phase-out of major producing areas such as Shanxi came to an end, some of the new coking capacity added last year began to release output. The weekly coke production of sample coking companies from relevant institutions has steadily rebounded since bottoming out at the beginning of this year. In terms of demand, since 2021, the output of molten iron from steel mills has decreased first and then increased. From the perspective of the weekly supply and demand data of coke, although the above marginal changes in the supply and demand level did not lead to oversupply, the large accumulation of inventory in coking companies during the Spring Festival and the appearance of in-transit and hidden inventory at the steel mill inventory placed huge pressure on spot prices. , Shanxi Steel Plant with high inventories took the lead in reducing the price, and the spot price fell by 300 yuan/ton in January.

In addition, according to Tangshan City’s March air pollution control plan, the actual demand for coke from the shutdown of some blast furnaces and coke ovens before March 10 will have little impact on the actual demand, but the total sewage discharge will be 45% lower than the average level from January to February. The demand for coke in mid-to-late March has had a strong negative impact, and the market's price expectations have further weakened.

In addition to industry fundamental factors, macro-level disturbances are also an important driver of the sluggish performance of coke futures prices. Driven by inflation expectations and economic recovery, the yield on the 10-year US Treasury bond rose significantly after the Spring Festival, which has attracted widespread market attention after it recently exceeded 1.5%. The continued rise in U.S. Treasury yields means that the market’s risk-free yields have risen. At the same time, along with the re-strength of the U.S. dollar index, it has triggered investors’ concerns about the subsequent performance of risky assets such as stocks and commodities. Recent prices of major global stock indexes and non-ferrous metals There are not minor adjustments.

Specific to the black series, although the price trend of the black series is basically dominated by domestic supply and demand, in recent years, especially since the epidemic last year, the impact of macro factors on the black series has been further strengthened. The stock market is known as a barometer of the macro economy. If the stock index is used to characterize the performance of the stock market, since the listing of rebar futures, the correlation coefficient between the main price of rebar futures and the trend of the Shanghai and Shenzhen 300 index is very small. It can be said that there is no correlation between the two. However, the correlation coefficient has continued to strengthen in recent years. Based on the data since 2019, the coefficient has reached 0.65, and since the outbreak of the new crown epidemic in 2020, the correlation coefficient between the two has been close to 0.9. The reason may be that under the epidemic, ample liquidity and ultra-low interest rates are the fundamental factors that all types of assets face and are the most influential, leading to the convergence of price performance. Assuming that this inference is valid, in the recent process of significant adjustments in the domestic stock market due to macro disturbances, the prices of black products, especially finished products, should be adjusted accordingly, but this did not happen in practice. One reason is that Tangshan’s limited production has limited supply. Not a small disturbance, on the other hand, it may be that although the macro level is negative for black prices, the market is more cautious about air distribution rebar and other varieties based on strong demand expectations that cannot be falsified, and instead concentrates on air distribution coke with weak fundamentals. As a result, the performance of coke is quite different from other black varieties.

With the in-depth correction of coke futures prices, the coke plate has a large discount to the spot price. However, similar to the reason why the spot price cannot be a short short when the price rose last year, the current high basis cannot be considered to support the price rebound. Strong driving force. At the macro level, judging from the Fed’s statement in the early hours of last Friday morning, the Fed has a high tolerance for the rise in long-term Treasury yields. The market hopes that the Fed will lower the yields of long-term Treasury bonds, and the US dollar index continues to rebound on risky assets. The price shock may continue. From the perspective of industrial fundamentals, Tangshan’s March production limit is expected to continue to pressure coke demand and prices. It may be difficult to see the spot price turning point in March. Coke is still the variety with the least resistance to air distribution in the black industry chain. Recently, coke prices have increased significantly. After the decline, the amount of open interest did not shrink significantly as in the past decline, which also shows that the shorts have no intention of retreating.

To sum up, the author believes that although the current coke disk is significantly discounted to the spot price after the depth adjustment, it is still not appropriate to buy the bottom before the spot price turning point appears. The emergence of this turning point depends on the weakening of the restraint of the demand for coke production. And the end demand for finished products is released as scheduled. It is expected that the inflection point will be less likely to be seen in March. The price of coke futures may continue to oscillate weakly in the short term.