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Steel market signs of recovery, coke futures hit a new high in February

Release time:

2018-06-06

The recent continued rise in coke futures has benefited from the improvement in the domestic steel market. The approval of large-scale infrastructure projects has stimulated domestic steel demand and accelerated inventory digestion.

Recently, the steel market showed obvious signs of recovery, the coke market was boosted, and the coke futures price hit a two-month high.

Due to the improvement of the fundamentals of the coke market, coke futures continued to rise, and the increase has increased. Yesterday (17th), the 1301 of the main coke futures contract of the Dalian Commodity Exchange hit a two-month high, closing at 1569 yuan/ton, up 27 yuan/Ton, an increase of 1.75, and the trading volume increased significantly to 1148298 lots.

The analysis believes that whether coke can continue to rise for a long time depends on whether the steel market can continue to improve, which directly determines whether the contradiction between supply and demand of coke can be effectively alleviated.

Steel market is warming signs

The recent continued rise in coke futures has benefited from the improvement in the domestic steel market. In the near future, crude steel production has increased, steel sales have improved, and steel companies have increased production in October for the purpose of making profits or turning losses into profits. The demand for coke has increased, which has promoted the rise of coke prices.

The approval of large-scale infrastructure projects has stimulated domestic steel demand and accelerated inventory digestion. The latest statistics from the China Iron and Steel Association show that in early October, the average daily output of crude steel of the member companies of the China Iron and Steel Association was 1.584 million tons, an increase of 4.9 percent from the ten-day month-on-month. The national estimated daily output was 1.916 million tons, an increase of 4 percent from the ten-day month-on-month.

At the same time, the price is also increasing. According to my steel network statistics, as of October 16, the comprehensive transaction price of steel was 3880 yuan/ton, an increase of 9.25 from the lowest point of 3551.6 yuan/ton on September 7. In terms of sales volume, in mid-September, 76 key iron and steel enterprises sold 1.29 million tons of steel per day, up 7.56 percent from mid-August and exceeding the average sales volume for the year.

The increase in sales has led to a significant decline in inventories. At present, rebar inventories in major cities across the country are 5.315 million tons. Compared with last week (as of October 8), rebar inventories across the country fell by 270600 tons this week, a decrease of 4.84 per cent.

In addition, the September PMI index for the steel industry released in early October was 43.5 per cent, up 3.6 percentage points from the previous month and breaking away from the nearly 45-month low set in August. Among them, the new orders index, which shows market demand, rebounded 9.3 percentage points to 41.6.

"As the iron ore price in September was at the lowest stage of the year, it is estimated that the current profit of rebar is already between 300 and 400 yuan/ton. The excessive rise in steel prices and profits will enhance the motivation of steel mills to resume production, and the possibility of further decline in output in the later period is small." A steel analyst at a futures company said.

Coke capacity utilization rate increased

The improvement in downstream demand has prompted a rebound in capacity utilization in coking companies and has been accompanied by a reduction in inventories. According to the reporter of the first financial daily from my steel network, from September 7 to October 12, the average coke capacity utilization rate of independent coking enterprises in various regions of China showed an upward trend, while the inventory was mainly the following, especially in North China, East China, central China and Northwest China, where the total output accounted for more than 80%, the utilization rate increased significantly.

As of yesterday, the overall stable operation of the coke market, coke spot prices in some areas to end the downward trend, rising significantly. Data show that the price of high-quality secondary metallurgical coke in Anyang, Henan has been increased by 40 yuan/ton, and the ex-factory price including tax is now 1340~1360 yuan/ton, the price of Panzhihua secondary metallurgical coke in Sichuan has been increased by 60 yuan/ton, the price of quasi-secondary metallurgical coke in Liupanshui, Guizhou has increased by 30 yuan/ton, and the price of coke in Xingtai, Hebei has been increased by 1370~1400 yuan/ton.

In addition, coking coal prices are also picking up, and coke is supported by costs. Since October, leading coking coal companies have taken the lead in raising sales prices. Among them, Shanxi Coking Coal Group has canceled preferential policies for some steel mills, and coking coal prices have increased by 30~40 yuan/Ton; Jizhong Energy increased the tax-inclusive price of the main coking coal car board by 50 yuan to 1205 yuan/ton; shandong Jining Mining, Zi Mining Group, Yulong Group, Yanzhou Coal Industry, Linyi Mining Bureau and other mainstream coal enterprises have raised the market price of clean coal, the increase is generally about 30 yuan/ton.

According to the analysis of Baocheng futures, in early September, coke futures rose before coke and coking coal spot markets, and were followed up by the spot market in the shock consolidation stage after a rapid rebound, thus solid the foundation for continued upward movement.

In the long run, the inability to resolve the contradiction between supply and demand has always been the most important reason for restricting the upward trend of coke prices. For some time before, the growth rate of coke production has always been faster than that of crude steel production. In 2011, China's coke production grew by 11.8 per cent year-on-year, while crude steel grew by 8.9 per cent. In the first six months of this year, coke production increased by 6.4 per cent year-on-year, while crude steel grew by only 1.8 per cent year-on-year.

However, the recent contradiction between supply and demand has shown signs of easing. From July to August this year, coke production continued to decline month-on-month, and the decline was relatively large. In the past two years, the first round of year-on-year growth rate was lower than that of crude steel production. After entering September, the growth of crude steel production was more obvious.

Coke,Steel

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