Most operators and industry insiders believe that the price increase in coke will not stop abruptly and will continue, at least until the first half of 2021. In the second half of 2020, as new coke production capacity is released and supply increases, the tight balance between supply and demand may change, and prices will fluctuate.

From the perspective of demand, my country's economy will not change in 2021. The Central Economic Work Conference held a few days ago pointed out that the macro policy in 2021 should maintain continuity, stability, and sustainability; policy operations should be more precise and effective, and there should be no sharp turns. The latest Global Economic Outlook report released by the World Bank on January 5 pointed out that based on estimates of the widespread use of the new crown vaccine, the global economy is expected to grow by 4% in 2021 and the Chinese economy is expected to grow by 7.9%.

At the same time, a batch of major infrastructure projects will be started in 2021 to ensure steady economic growth. The special report of "China Macroeconomic Analysis and Forecast" predicts that my country's fixed asset investment growth rate will reach about 6% in 2021, of which manufacturing investment will grow at 10% year-on-year, and infrastructure and real estate investment will grow at about 4%.

It is foreseeable that the "steel demand" in 2021 will be stronger than in 2020. The Metallurgical Industry Planning and Research Institute recently released the report "China's Steel Demand Forecast Results in 2021", and it is estimated that China's steel demand will be 991 million tons in 2021, an increase of 1.0% year-on-year. The strong "steel demand" will also drive the "steel demand". Therefore, the demand for the coke market will continue to grow in 2021, supporting coke prices to steadily strengthen and run at a high level.

From the perspective of supply, the increase in coke supply will also not change, but it will continue to grow gradually and slowly. According to incomplete statistics, the country’s newly added coking capacity is expected to be 24.5 million tons in the second half of 2020. The scale of the currently ignited ovens or put into production is equivalent to this, but the actual coke production has been delayed. It takes a long time from the ignition and oven of the new coke oven to the coke production and then to full production. Taking into account factors such as the commissioning of the previous oven and coke ovens and the delay in reaching production, the industry predicts that the newly added coking capacity will be 9.6 million tons from January to May 2021, and the newly added coking capacity will be determined from October to December 2020. 12.76 million tons. Therefore, in the first half of 2021, it is difficult to completely change the tight supply of coke, and the tight balance between supply and demand will continue, supporting the high price operation of the coke market.

However, as the new capacity after the replacement of capacity is fully released and the scale of production is reached, the supply of coke will increase significantly. At that time, the tight balance of coke supply and demand will be broken, and the coke market price will fluctuate at a high level and fluctuate downward.

From the perspective of imports and exports, my country's net coke imports in 2021 may still continue. The Customs Tariff Commission of the State Council issued the "Notice on the Adjustment Plan for the Provisional Import Tariff Rates in 2021". From January 1, 2021, Mongolia will begin to implement the Asia-Pacific Trade Agreement tariff rate. The tariff rate for my country's import of coke from Mongolia will be changed from the current 5% of the country’s tax rate was reduced to 2.5% of the treaty tax rate. A few days ago, the National Development and Reform Commission announced that in recent years, China, Russia, and Mongolia have further strengthened cooperation in the construction of railway and other transportation infrastructure interconnections, and positive progress has been made in the construction of multiple railway channels. This has created favorable conditions for China to further expand the scale of trade in energy resources such as coal with Russia and Mongolia. According to the National Development and Reform Commission, Mongolia’s southbound railway has been laid for approximately 112 kilometers. The railway connects the Mongolia TT (Tavin Tolgoi) coal mine with the China Ganquan Railway, with a total length of 254 kilometers. The completion of the southbound railway will greatly increase Mongolia's coal export capacity to my country.

In 2021, with the adjustment of the tariff rate of imported coke from Mongolia, coupled with the convenience of transportation and the increase of transportation capacity, the amount of coke imported from Mongolia will increase. This will make up part of the supply gap in the domestic coke market.