In the night trading, the main force of coke futures was switched to the J2109 contract, and the price of the J2109 contract rebounded to around RMB 2550/ton. At present, the J2109 contract price has continued to rebound since it bottomed on March 23, and there is still about 200 yuan/ton upside from the previous high (2759 yuan/ton). In terms of spot, driven by the continuous rebound in futures prices, after two weeks of gaming, the first round of rising spot prices in coke producing areas after eight consecutive declines has gradually landed. In addition, the spot trade price of coke in Rizhao Port is still rising slightly. As of last Friday, the spot price of coke was 2230 yuan/ton.

In terms of profit, last week's survey data showed that the sample coke enterprises had an average profit of 305 yuan per ton of coke, a slight decrease of 15 yuan from the previous month. This data has not yet taken into account the first round of increases in coke prices after eight consecutive declines. If the increase of 100 yuan/ton is added, the continued decline in the earnings of coke enterprises is expected to be reversed.

From a fundamental perspective, on the supply side, last Friday's data showed that the capacity utilization rate of the 100 sample coking companies was 76.93%, a decrease of 1.27 percentage points from the previous week and an increase of 1.75 percentage points from the same period last year. Among them, the capacity utilization rate in North China decreased by 2.46 percentage points on a week-on-week basis, and the East China region fell by 1.18 percentage points on a week-on-week basis. The further decline in capacity utilization is mainly due to environmental factors in various regions, especially in Shanxi Province recently due to the presence of environmental protection inspection teams and frequent inspections. Coking companies in various regions have restricted production in a certain proportion, resulting in a decline in capacity utilization. In addition, three 4.3-meter coke ovens in Xiaoyi City, Luliang City, Shanxi Province, with a total production capacity of 1.45 million tons, are gradually shutting down, and individual coking companies have stopped importing coal, and the withdrawal of production capacity has led to a marginal decline in coke supply.

In terms of policy, Shandong Province has recently issued the "Province Implementation of the "Three Resolute" Action Plan (2021-2022)", which requires Shandong Province to phase out coke ovens and heat recovery coke ovens with a carbonization chamber height of less than 5.5 meters in 2021. Reduce coking production capacity by 1.8 million tons, and continue to implement "fixed coking with steel" and "fixed output with coal" to ensure that the province's annual coke output is controlled within 32 million tons. In 2020, under the constraints of the policy of “fixed production based on coal”, Shandong's total coke production will be 31.63 million tons, achieving the goal of coke production control. In addition, the plan requires coal mines to close 27 coal mines in 2021, with a total production capacity of 34 million tons. This is good for the price of raw coking coal, and the increase in cost will provide strong support for the price of coke.

From the demand side, last week, the blast furnace ironmaking capacity utilization rate of 247 steel plants was 87.67%, an increase of 0.72 percentage points on a week-on-month basis and an increase of 0.97% year-on-year; the average daily molten iron output of blast furnaces was 233,600 tons, a week-on-week increase of 1.93 Million tons. The rise in molten iron output is due to the resumption of production in some blast furnaces in the steel mills in Tangshan City, Hebei Province. According to investigations by relevant institutions, the actual implementation of the limited production ratio of these blast furnaces in March was higher than the document. Therefore, entering April, the blast furnace production capacity of these steel companies has recovered, but they still continue to strictly implement the steel companies' production limit emission reduction ratio requirements. The slight recovery of demand will boost the price of coke. However, the current production limit of Tangshan steel mills in Hebei Province shows no signs of relaxing. In addition, the steel mills of Handan City, Hebei Province are also expected to limit production, and coke demand will still be suppressed.

In terms of inventory, the total coke inventory has a tendency to peak periodically, and it has maintained a slight decline last week. Coke inventories in steel plants and coking plants continued to fall. In terms of ports, due to the recent continuous rise in disk prices and the slower rise in spot prices, there is room for arbitrage in futures, resulting in increased enthusiasm for traders to obtain goods. Last week, the accumulation of coke port inventory accelerated, with a week-on-week increase of 145,000 tons. While traders are actively gathering in ports, they have also accelerated the decline in coke enterprises' inventories.

On the whole, environmental protection pressure has increased in some areas of Shanxi Province recently, and some coking companies have gradually shut down coking capacity, and coke supply has seen a marginal decline, which has helped the first round of coke price rises. However, it should be noted that the current production limit policy for steel mills in Tangshan City, Hebei Province is still relatively strict, and short-term coke demand may continue to be restricted. On the disk, the J2109 contract is still in a rebound trend, and it is not recommended to chase the rise. Under the influence of relatively optimistic market sentiment, it may be considered to place more orders every callback.