After the Spring Festival, the black series rose sharply, and the prices of rebar, hot coil and iron ore hit new highs, while coke was obviously weaker than iron ore and coil. By sorting out the fundamentals of supply and demand, we believe that coke prices still have upward momentum.

Negative expectations are released early

After the Spring Festival, the spot price of coke began to weaken, which is closely related to the following factors. First, due to the influence of automobile transportation during the Spring Festival, the coke inventory of independent coke enterprises began to accumulate. In addition, the willingness of steel mills to purchase after the festival was not strong, which led to increased pressure on independent coke enterprises. Secondly, the distribution of steel and coke profits was obviously unbalanced. Look, in the game of steel and coke, the steel mill is on the stronger side, and the profit per ton of steel is generally higher than the profit per ton of coke. , under the circumstance that the profit per ton of coke exceeds 1,000 yuan and the ton of steel is basically at a loss, steel mills have a strong willingness to suppress coke prices; finally, the fundamentals of coke supply and demand have also deteriorated. increased. On the demand side, Tangshan has been affected by heavy pollution weather, and the production limit of blast furnaces has increased. In addition, as the two sessions are approaching, the operating rate of blast furnaces may decrease from a high level in the short term. Therefore, the tight supply and demand pattern of coke has changed, which also prompted the spot price of coke to go up. a weak factor.

Now the second round of 100 yuan/ton increase in coke spot price has started. According to the rhythm of weekly spot price falling by 100 yuan, in mid to late March, with the elimination of new coke production capacity and the start of steel terminal demand, the spot price is expected to stop falling and rebound. It is expected that coke The spot price fell by 500 yuan/ton in total, corresponding to the disk price around 2,500 yuan/ton. The futures basically reflected the expectation of a weaker spot, and the later period of the disk was also lacking in a sharp downward momentum.

Incremental or limited supply until May

The capacity utilization rate of independent coke enterprises fluctuates around 91%, and the room for continued upside is very limited. The increase in coke supply side is mainly from the introduction of new production capacity. According to the calculation of the 70% capacity utilization rate of the newly added production capacity from January to February, by the end of April, the total coke output will be reduced by 100,000 tons. If 50% of the production capacity is eliminated, by the end of April, the total coke output will increase by 750,000 tons, and the overall supply increase will be limited. At the same time, according to the calculation of the elimination of 25.17 million tons of production capacity in 2020, if the total production capacity in 2021 reaches the level of 2019, it will take until August, so for the whole year, under the condition of a substantial increase in demand year-on-year, the pressure on the coke supply side in September will not be too big.

The reduction of steel production is an important measure for my country to achieve carbon peaking and carbon neutrality. The Ministry of Industry and Information Technology stated that it will study and formulate relevant work plans to ensure that the year-on-year reduction in steel production is fully realized in 2021. However, judging from the short-term blast furnace operating rate and newly added blast furnace capacity data, crude steel output in the first half of the year will remain stable and increase. At present, the utilization rate of blast furnace capacity remains above 92%. During the Spring Festival, steel mills are generally in a loss situation, and downstream demand is basically stagnant, but the operating rate has not decreased but increased. After the profits of steel mills continue to recover, the willingness of steel mills to actively reduce production will be even worse, and the support for coke demand will be stronger. Judging from the newly added and eliminated production capacity, 33.93 million tons of pig iron production capacity was put into operation from late February to the end of April, and 14.51 million tons of pig iron production capacity was eliminated, with a net increase of 19.42 million tons. If the elimination and new production capacity are strictly implemented, the demand for coke will increase by 450,000 tons by the end of April. If the production capacity is not strictly eliminated, the increase in coke demand will be even greater.

Pay attention to the replenishment of traders

From the perspective of inventory, after capacity reduction in 2020, the total coke inventory has dropped significantly. As of February 26, the data showed that the total coke inventory of 230 independent coke enterprises, 110 steel mills and 4 ports was 7.0736 million tons, a year-on-year decrease of 1.9899 million tons. Separately, the inventory of each link is at a relatively low level. The coke inventory of independent coke enterprises is 769,000 tons, a year-on-year decrease of 896,900 tons; the port coke inventory is 1.84 million tons, a year-on-year decrease of 920,000 tons. Significantly lower than the level of the same period in previous years, the low inventory at the port will also prompt traders to actively take goods, and there will be some speculative demand for coke in the later period. After the capacity reduction in 2020, the coke market inventory is very low, and the low inventory in each link has brought greater support to coke prices.

To sum up, the short-term inventory of steel mills has increased a lot, and the profit distribution of steel coke is unbalanced, which has led to the weakening of the coke spot and the decline of the disk. However, the coke supply remains tight. We believe that in March, with the The recovery of steel terminal demand and the restriction of blast furnace production in Hebei after the "two sessions" may weaken, and coke prices still have upward momentum. In the near future, it is necessary to pay close attention to the replenishment situation of traders. Once port traders start to actively take goods, the spot price of coke will usher in an inflection point. risk. (Soochow Futures)