The high price of coking coal combined with weak demand from downstream steel mills has resulted in an overall low coke price in recent months, and the cost of coke has reversed significantly. However, towards the end of the year, with the implementation of the fourth round of price increases in recent days, Jiaoqi may emerge from the loss situation as a whole.
Coke lift and four wheel landing
On December 27, black commodities in the domestic futures market were generally red, and the main contract on coke 2305 was up 2.89%, which had finished up 2.93% the previous day.
According to news reports, the fourth round of the coke market increase will be fully implemented on December 22. The price of wet quenching will increase by 100 yuan/ton, and the price of dry quenching will increase by 110 yuan/ton. the secondary main price is 2650-2750 yuan/ton. According to data from Baichuan Yingfu, the coke market was operating steadily on December 27, and the secondary major price was 2650-2750 yuan/ton.
In 2022, the domestic market price of coke will rise and fall, and the profitability of coke enterprises has not been good since the second half of the year.
In the first three quarters of this year, Antai Group’s net profit loss was 63.5991 million yuan, of which the loss in the third quarter reached 177 million yuan. As for the reason for the big loss in the third quarter performance, the company had announced that the market price of the main product coke first increased and then decreased, while the coal-fired coke market showed a structurally tight pattern and the price has risen sharply; the downstream demand for steel products was insufficient, and the sales The price continued to decline and fluctuated at a low level. Although the company has taken measures to reduce costs, it has not been able to offset the impact of purchases and sales. The company’s profit margin has been reduced, and the profits of major products have been at a low level in recent years.
Also in the third quarter, Shanxi Black Cat lost 196 million yuan, dragging its net profit in the first three quarters to 240 million yuan, a year-on-year decline of 82.07%.
The company also said the sharp year-over-year decline in third-quarter performance was due to the fact that the year-over-year increase in the price of coke, the company’s main commodity, was not as high as that of raw materials. clean coal material, resulting in a year-over-year decline in profits.
However, with the recent four consecutive rounds of price increases, Jiaoqi’s profits have finally recovered.
According to Baichuan Yingfu’s analysis, the coke oven enterprises’ profits have been restored, and most of them have turned their losses into profits. Market confidence has improved, coke enterprises have gradually increased production, and the overall operating rate has been increased. Coke shipments are generally regular, and the inventory in the coke enterprises is still mostly at a low level. In some areas, it is difficult to find truck drivers, which leads to a decrease in transportation efficiency and a slight accumulation of warehouses. At present, the demand for coke from downstream blast furnaces is acceptable and they are actively buying. Steel mill coke inventory is currently broadly low to medium, and enthusiasm for winter storage and replenishment is high.
Downstream is facing a “weak reality” and the coke price is stable in the near term
While the price of coke continues to rise, the downstream steel price trend is weak and the profits of the steel companies are compressed and essentially lose money.
Wang Yingguang, a senior analyst at Lange Iron and Steel Network, said that as the cost of steel production has risen, steel mill losses have continued to expand, so steel supply has remained relatively low. According to data from the China Iron and Steel Industry Association, as of mid-December, the main statistical steel enterprises produced a total of 19.6382 million tons of crude steel and 19.1551 million tons of steel products. Among them, the daily production of crude steel was 1.9638 million tons, down 1.15% from the previous month.
In addition, the social inventory of steel is also at a relatively low level. According to monitoring data from the Lange Iron and Steel Cloud Business Platform, the social inventory of steel products in 29 key cities across the country was 7.934 million tons on December 23, a decrease of 30,000 tons from the previous week; a decrease of 573,000 tons compared to the same period last year, a decrease of 6.74%.
Wang Yingguang believes that the current steel market is still facing the contradiction between “strong expectations and weak reality”. While the market is optimistic about further improving expectations, it also promotes the continued strength of the black market, but the ability to accept expensive resources is limited. From a spot perspective, steel prices are still difficult to break down and are expected to fluctuate slightly or continue to follow the market to continue the bullish game.
As for the price development of the coke market, Dayue Futures believes that after the implementation of the four rounds of coke price increases, the profits of the coke companies have been restored to a certain extent. However, considering the recent interference of the epidemic, some coke enterprises in the production area are not willing to increase production, it is still a little tight, and the supply demand is better. However, the online auction market for raw coal failed the auctions and the auction prices of some types of coal fell, which weakened the support for the spot price of coke. Coke is expected to work temporarily soon term.
According to Dongxing Futures’ analysis, the off-season characteristics of finished material consumption are evident, and both production and demand have decreased. Building materials and panels have accumulated, and cement shipments have decreased. Downstream may continue to accumulate in the near future. Steel mills experienced a monthly decrease of 9,500 tons of molten iron, increased coking coal stock replenishment, four rounds of lift and off, and steel mill stock growth slowed. Coke enterprise profits continued to recover: Affected by the epidemic, the operating rate increased slightly to 73.4%, while coke enterprise inventories continued to decline, and supply and demand continued to be limited.
Affected by the epidemic and the completion of production at the end of the year, the decline in coking coal mine production has widened. Production before the year may continue to be low, coal mine inventory continues to decrease, downstream supply It is obvious, the steel products transaction weakened, the price of coking coal fluctuated at a high level, and some auctions failed. Safety inspection may become more stringent before the end of the year, short-term supply may remain low, the downstream consumer side will weaken, and restocking demand will bring support in place. recovery in demand and the price of coke could fluctuate in the near term.
