Four rounds of coke price increase and landing coke enterprises out of the loss situation

The high coking coal price combined with the weak demand from downstream steel mills has led to the overall low coke price in recent months, and the cost of coking has been significantly inverted. However, near the end of the year, with the implementation of the fourth round of price increases in recent days, Jiaoqi may come out of the loss situation as a whole.

Coke four-wheel lifting and landing

On December 27, black commodities in the domestic futures market were generally red, and the main coke contract 2305 reported a rise of 2.89%, which had closed up 2.93% the previous day.

According to the news, the fourth round of raising the coke market 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 current secondary mainstream price is 2650-2750 yuan/ton . According to the data of Baichuan Yingfu, on December 27, the coke market operated steadily, and the secondary mainstream price was 2650-2750 yuan/ton.

In 2022, the domestic coke market price 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, the net profit loss of Antai Group was 63.5991 million yuan, of which the loss in the third quarter reached 177 million yuan. As for the reason for the large loss in the third quarter performance, the company had announced that the market price of the main product coke rose first and then fell, while the coal coke market showed a structurally tight pattern, and the price rose sharply; the downstream demand for steel products was insufficient, and 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 make up for the impact of both purchases and sales. The profit margin of the company has been squeezed, 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 down the net profit in the first three quarters to 240 million yuan, a year-on-year decline of 82.07%.

The company also stated that the sharp year-on-year decline in third-quarter performance was due to the fact that the year-on-year increase in the price of coke, the company’s main product, was not as high as that of raw material clean coal, resulting in a year-on-year decline in profits.

However, with the recent four consecutive rounds of price increases, the profits of Jiaoqi have finally been restored.

According to the analysis of Baichuan Yingfu, the profits of coking enterprises have been restored, and most of them have turned losses into profits. Market confidence has improved, coke enterprises have gradually increased production, and the overall operating rate has been raised. Coke shipments are generally smooth, and the inventory in coke enterprises is still mainly 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 purchasing. The coke inventory of steel mills is currently basically at a medium or low level, and the enthusiasm for winter storage and replenishment is high.

The downstream is facing “weak reality” and the price of coke is stable in the short term

While the price of coke continues to rise, the trend of downstream steel prices is weak, and the profits of steel companies are compressed, and they basically lose money.

Wang Yingguang, a senior analyst at Lange Iron and Steel Network, said that with the rising cost of steelmaking, the losses of steel mills continued to expand, so the supply of steel remained relatively low. According to data from the China Iron and Steel Industry Association, in mid-December, key statistical iron and 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 output of crude steel was 1.9638 million tons, a decrease of 1.15% from the previous month.

In addition, the social inventory of steel is also at a relatively low level. According to the monitoring data of the Lange Iron and Steel Cloud Business Platform, on December 23, the social inventory of steel products in 29 key cities across the country was 7.934 million tons, a decrease of 30,000 tons from the previous week; a decrease of 573,000 tons from the same period last year. The drop reached 6.74%.

Wang Yingguang believes that the current steel market is still facing the contradiction of “strong expectations and weak reality”. While the market is optimistic about the further enhancement of expectations, it also promotes the continued strength of the black market, but the ability to accept high-priced resources is limited. From the spot point of view, steel prices are still difficult to drop, and it is expected to continue to fluctuate slightly, or continue to follow the market to continue the upward game.

Regarding the price trend of the coke market, Dayue Futures believes that after the four rounds of coke price hikes have been implemented, the profits of coke companies have been restored to a certain extent. However, considering the recent interference of the epidemic, some coke companies in the production area are not willing to increase production. It is still a little tense, and the demand for replenishment is better. However, the online auction market for raw coal has failed auctions, and the auction prices of some coal types have fallen, which has weakened the support for the spot price of coke. It is expected that coke will run temporarily in the short term.

According to the analysis of Dongxing Futures, the characteristics of the off-season of finished material consumption are obvious, and both output and demand have declined. Building materials and panels have accumulated, and cement shipments have declined. The downstream may continue to accumulate in the near future. Steel mills saw a month-on-month decrease of 9,500 tons of molten iron, increased coking coal inventory replenishment, four rounds of increase and landing, and steel mills’ increase in inventory slowed down. The profits of coke enterprises continued to recover. Affected by the epidemic, the operating rate increased slightly to 73.4%, while the inventory of coke enterprises continued to decline, and the supply and demand continued to be tight.

Affected by the epidemic and the completion of production at the end of the year, the decline in production of coking coal mines has expanded. The production before the year may continue to be low, the inventory of coal mines continues to decline, the downstream replenishment is obvious, the transaction of steel products has weakened, the price of coking coal has fluctuated at a high level, and some auctions have failed. Security checks may become stricter before the end of the year, short-term supply may remain low, downstream consumption will weaken, and demand for inventory replenishment will bring support to spot goods. Attention should be paid to the recovery of demand, and coke prices may fluctuate in the short term.

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