The futures prices of various types of ferrous metals have gone out of the "roller coaster" market, and the overall trend is "first rise and then decline". Among them, the prices of steel, iron ore, and coking coal have all gone through a process from a daily limit to a "limit down". With the sharp and rapid decline in the two trading days last Thursday and Friday, the prices of various types of ferrous metal plates gradually formed a downward trend. The overall weakening of ferrous metals has a certain relationship with the recent State Council executive meeting’s proposal to “track and analyze the domestic and foreign situation and market changes, make market adjustments, and deal with the rapid rise in commodity prices and its collateral effects”; in addition, cities such as Tangshan and Shanghai In response to the recent sharp increase in steel prices and continuous record highs, relevant departments interviewed local steel production companies, demanding that illegal acts such as collusion, fabricating, and price driving up should be eliminated, and the market's bullish sentiment has been calmed down.

Compared with other varieties, the performance of coke is weak. At the beginning of last week, other varieties had a record high performance, and the price of coke failed to stand at 3000 yuan/ton (the highest in history is 3036 yuan/ton), and then began to fluctuate downwards, as of last Friday (May 14) At the close, the price has fallen to around 2600 yuan/ton.

In terms of spot, the current spot price of coke production areas is still in the upward cycle, and mainstream downstream steel mills have accepted the seventh round of coke price increase. So far, the price of CDQ has risen by 840 yuan/ton, and the price of wet quenching has risen by 700 yuan/ton. In terms of trade prices, as of last Friday, Rizhao Port’s quasi-level metallurgical coke was quoted at 2,760 yuan/ton. Generally, the price trend of coke futures will lead the spot price. With the sharp drop in the futures price, it also indicates that there is little room for the later rise of the coke spot price.

From the perspective of coke fundamentals, the current demand for coke is still relatively strong and is in a destocking trend. However, under the stimulus of high profits, the recovery of coke supply is rapid, which may become the leading factor in the decline of coke prices.

Specifically, in terms of profit, as the price of coke continues to rise, the current sample coke enterprises' profit per ton of coke has reached about 740 yuan. If the seventh round of increase is included, the profit per ton of coke will exceed 800 yuan. The profitability of coke enterprises is considerable, superimposed on the recent relaxation of environmental protection inspections in Shanxi Province, and the enterprise has a high mood to resume production. Last week's survey data showed that the capacity utilization rate of sample coke enterprises was 77.3%, a rapid rebound of 2.76 percentage points on a week-on-week basis, but it was still lower than last year. Around 2.5 percentage points in the same period, there is room for further increase in the later period. In the short term, under the condition of steady growth in demand, the rapid growth of supply may increase the market's bearish expectations of focusing on prices.

From the demand side, the steel mills in Tangshan City, Hebei Province have continued to maintain the previous deadline for production in the near future, and there has been no significant change in the production policies of steel mills in other regions. The overall profitability of the steel mills is relatively good, with a profitability rate of over 90%, and the enterprise's production enthusiasm is acceptable. Last week, the average daily molten iron output of 247 steel plants was 2.4187 million tons, an increase of 7,400 tons on a week-on-week basis and an increase of 24,600 tons over the same period last year. At present, the demand for coke is still strong, and the data is higher than the level of the same period in previous years. There is no further pressure on the blast furnace production of steel mills. The average daily molten iron output is expected to continue to increase, and the demand for coke is improving in the short term. In addition, the latest data from the National Bureau of Statistics show that my country’s pig iron output in April was 75.97 million tons, a year-on-year increase of 3.8%. The output of pig iron from January to April was 306.64 million tons, a year-on-year increase of 8.7%. The pig iron data is showing positive growth, which also means that despite the limited production of steel mills in some areas, the overall demand for coke remains good.

In terms of inventory, the rapid recovery of coke supply has not yet been reflected in inventory. Last week, the overall coke inventory continued to show a downward trend. In terms of structure, the inventory reduction is mainly manifested in the steel mills. The coke inventories of the steel mills have been declining for 7 consecutive weeks, which has been at the same level as before and after the Spring Festival. The available inventory days have dropped to 13.25 days; port inventory has also declined slightly, mainly because The spot price of the origin has been rising for several consecutive rounds, the cost of acquiring goods by traders has increased, the futures price has returned to the discount state, and the arbitrage space is limited, which has caused the sentiment of the port to fall; the inventory of the coking plant continues to remain low, basically in a state of no inventory to drop. This also greatly boosted the confidence of Jiao Qi.

On the whole, downstream demand for coke is still strong, and inventories continue to be depleted. However, under the stimulus of high profits, the rapid recovery of coke supply will inevitably cause the market to worry about future supply and demand shifting to easing. On the disk, the market's excitement has eased, the prices of all types of ferrous metals have fallen from high levels, and the focal price has followed the weakening. The price of coke is more elastic and the risk of volatility increases. Participants are advised to control their positions and pay attention to the overall trend of the ferrous metal sector.