So, can this round of coke price increase continue? In this regard, operators and industry insiders believe that from the current coke market supply and demand situation and operating situation, as well as the willingness of coke companies to increase prices, in September, the coke market price increase is still Will continue, the second and third rounds of rising prices will appear as scheduled.

In mid-August, the price of metallurgical coke in North China and East China rose by RMB 50/ton. In the near future, industry insiders still have bullish expectations, coupled with tight inventories of coke companies in the southwest region, which has a certain pulling effect on the metallurgical coke market prices in the southwest region. The Yunnan-Guizhou coke enterprises indicated that they would raise the price of metallurgical coke in the first half of September.

On August 28, individual coke companies in Shanxi and Hebei have sent letters to increase the ex-factory price of metallurgical coke by RMB 50/ton.

At present, the coke inventory of some steel plants in Hebei is at a low level, and it is urgent to replenish the inventory, order and urge the coking enterprises. Some coking companies in Shanxi have also recently received notices from steel mills. It is reported that some steel mills in North China and East China will accept the second round of metallurgical coke price increases.

Industry insiders said in an interview with a reporter from China Metallurgical News that the current coke inventory of steel mills is low and the purchasing enthusiasm is relatively high, while coke companies have no inventory and shipments are smooth. In the short term, they will continue to bullish coke market prices and have a strong willingness to increase. It is expected that more coke companies will increase the price of metallurgical coke by RMB 50/ton. By then, some steel mills with low coke inventories in North China and East China will accept price increases from coking companies.

From this point of view, the second round of coke market price increase may be finalized, but how long this wave of rising prices can last depends on the following factors:

One is the change in coke demand. "Golden Nine and Silver Ten" is the traditional peak season for steel market demand, with active fiscal policies and infrastructure investment and other factors superimposed, industry insiders predict that the effective demand intensity of downstream terminals is expected to increase; and in August, steel market prices generally fluctuated upwards, and some steel prices rose For example, the market price of cold-rolled sheet in Shanghai has risen by 350 yuan/ton in one month, steel mills are profitable, and the production enthusiasm is high, which stimulates the release of production capacity, and the demand for coke is large.

At the same time, a batch of new capacity will be put into production soon. According to industry insiders, this year's steel capacity replacement project has entered a release period. According to preliminary statistics, the replacement crude steel capacity is planned to be put into production in 2020 by 73 million tons, with a net increase of about 20 million tons. In the second half of the year, the first phase of the Liugang City Port project and Zongheng Steel's blast furnace will be put into operation, which will further increase market supply and demand for coke will remain at a high level.

The second is the change in coke supply. With the price increase in the coke market, the efficiency of coke companies has improved, and the enthusiasm for production has generally increased. In addition, some coke companies have low coke inventories or even no inventory, and they are willing to increase production. At present, coking enterprises in most regions are basically at full capacity, and coke production is expected to increase in the later period, and the tight coke supply situation will be changed.

However, environmental protection production restrictions may restrict the release of coking enterprises' production capacity. It is understood that the central environmental protection inspection team has entered Shanxi, and individual large coking companies currently restrict production at about 30%. A few coke companies have also received notifications that metallurgical coke production will decline in the short term. But this is only a short-term impact. At present, a few coking companies have completed environmental protection inspections, and coke ovens will resume normal production. It is expected that the capacity utilization rate of these coking companies will increase slightly in the future.

The third is the game between coke companies and steel companies around the price increase of coke. Recently, due to the rising prices of iron ore, scrap steel and other steel raw materials, the production costs of steel mills have been rising steadily, and the rise in coke prices has been resisting. For example, the first round of price increase in the coke market in Northeast China has not been fully realized until late August.

From the perspective of coke companies, many coke companies have low coke inventories, and many coke companies have zero inventories. Some companies have a strong willingness to raise prices due to environmental protection restrictions and production capacity. The game between steel companies and coke companies continues. In the short term, the probability of coke companies winning is high.

The fourth is the changes in coke import and export. The new crown pneumonia epidemic has had a serious impact on the economies of various countries, affecting the steel industry and steel raw material markets. In the first half of 2020, my country’s coke exports were 1.758 million tons, a year-on-year decrease of 54.3%; the average export price of coke was US$222.4/ton, a year-on-year decrease of 24.5%; coke imports were 746,000 tons, a year-on-year increase of 1030.8%; the average price of coke imports was US$233.1 /Ton, an increase of 6.2% year-on-year. In July, the import volume of coke continued to increase sharply to 409,900 tons, a year-on-year increase of 663.32%, reaching a record high; during the same period, the export volume of coke was 390,300 tons, and the import volume exceeded the export volume for the first time. If the export volume of coke continues to decline and the import volume increases substantially, it will have a certain impact on the domestic coke market supply.

Fifth, changes in the market trend of coking coal. It is understood that the production of 1 ton of coke consumes about 1.3 tons of coking coal, so the price of coking coal determines the cost of coke production. At present, the domestic coking coal market is operating steadily. Most coal companies are producing at full capacity. The supply of coking coal is slightly loose. The supply of individual high-quality coal types is tight, and prices have risen slightly. In the short term, the market price of coking coal will not change much. However, rising coke prices will have an impact on the coking coal market. From the historical trend of coke and coking coal prices, the response of coking coal prices to changes in coke demand has a certain lag: often the price of coke rises first, and after a period of time, the price of coking coal increases; or the price of coke falls. After some time, the price of coking coal fell. According to this law, the price of coking coal in the later stage may rise with the increase in coke prices, which will drive the increase in production costs of coking enterprises and increase the ex-factory price of coke.