The contract price of the main coke futures J2109 has been volatile and strong. It has closed for 4 consecutive weeks and is approaching the 3000 yuan/ton mark again. In terms of spot production, local coking companies have successively started the second round of raising coke prices by 120 yuan/ton. Some steel plants in Shandong Province have expressed acceptance of the increase in coke purchase prices. It is expected that this round of increase will be more likely to be fully implemented. Affected by the increase in spot prices at the origin, trade prices have continued to rise slightly, and the sentiment of traders in the port has recovered from the previous period. The current price of quasi-level metallurgical coke from Rizhao Port in Shandong Province is reported to be 2870 yuan/ton, and the price of first-level metallurgical coke is reported to be 2870 yuan/ton. The price is reported at 2970 yuan/ton.

Recently, the price of coking coal, a raw material for coking, has continued to rise, and coking cost support has become the main driving factor for the continuous increase in coking prices. The main coking coal futures contract JM2109 has risen by more than 25% in the past four weeks. As of August 6, the closing price was 2374.5 yuan/ton, a record high. Coal char has become the strongest performance in the ferrous metal sector recently.

In the first half of this year, my country’s coking coal output reached 241.3 million tons, a cumulative year-on-year increase of 5.37%, and the cumulative growth rate has narrowed month by month. The coke output during the same period was 23.304 million tons. The demand is significantly higher than the supply. In addition, although the output of coking coal increased year-on-year, the supply of coking coal was restricted by policy. Relevant state departments have increased their supervision of coal mine safety rectification, especially before and after July 1st, coal mines in many places in China have generally restricted production, and the current coal mine weighted operating rate is still lower than the same period in previous years. At the same time, in order to ensure the supply of thermal coal in the peak summer, the coking coal production mines allocated by the producing area were forced to be converted into thermal coal production mines, and the coking coal mines allocated by the other departments were restricted to the clean coal washing rate, and the supply of coking coal resources was once again extrusion.

In response to the shortage of coal, the National Development and Reform Commission and other departments proposed in July to accelerate the release of high-quality coal production capacity. It is understood that the Inner Mongolia region has approved a batch of coal mine land use procedures involving a production capacity of 66.7 million tons/year. At present, all these coal mines have resumed production. It is expected that actual output will be formed in August, and the output can be stably increased by 200,000 tons/day after reaching production capacity. Policy orientation is conducive to alleviating the shortage of coal, but it is more difficult to quickly reverse the tight supply and demand pattern. It is expected that the short-term supply of thermal coal and coking coal will continue to be tight. However, it should be noted that the high temperature weather is gradually receding, and the demand for thermal coal will also gradually fall. Some coal mines that have been supplying thermal coal in the early stage may switch to producing coking coal, which will slow the trend of tight coking coal to a certain extent.

Returning to the basics of coke, after the price of coke rose by RMB 120/ton, the average profit per ton of coke by coking enterprises did not expand significantly. Last week it was RMB 283/ton. The main reason was that the increase in coke prices basically offset the increase in raw material prices. In addition, coke prices have begun the cycle of rising again, and coke companies have improved their production enthusiasm. In the early stage, coke companies that actively restricted production due to losses in some cities in Shanxi Province, the main producing areas, have gradually resumed production. The survey data showed that the capacity utilization rate of the sample of 100 independent coking companies was 73.28%, a rebound of 0.80 percentage points from the previous month and a year-on-year decrease of 6.72 percentage points. On the demand side, at present, various regions have successively introduced policies to control crude steel output, and short-term steel plant blast furnace capacity utilization rates have maintained a moderate downward trend. Last week, the utilization rate of 247 blast furnace ironmaking capacity was 85.73%, a decrease of 1.11 percentage points from the previous month and a year-on-year decrease of 9.03 percentage points; the average daily molten iron output was 2,281,900 tons, a decrease of 29,500 tons from the previous month, and a year-on-year decrease of 240,300 tons. With the continuous decline in demand, the tight supply and demand pattern of coke has improved, but the overall inventory has not yet formed a trend of effective inventory accumulation and remains at a historically low level.

On the whole, both ends of coke supply and demand are in a phased tightening trend, especially the demand side reduction is relatively obvious, the pattern of tight coke supply and demand has improved, and the fundamentals of coke futures prices have gradually formed a negative trend. At present, the key factor lies in the cost side, that is, the trend of coking coal prices. If the trend of tight coking coal supply continues, it is unlikely that coke prices will significantly weaken. In addition, the time is approaching the delivery month, and the 09 contract will be more affected by the delivery logic factors, and the main coal coke will gradually be changed to the 01 contract. In terms of operation, it is recommended to pay attention to the opportunity of doing long 01 contract coking disk profits, that is, multi-coke and empty coking coal.