How Will the Subsequent Trend of Coke Go as the Wind of Coke Price Increase Continues to Spread?
Jul 12, 2024
My Steel News: Looking back at the recent market, the coke market has generally shown a strong trend. On the 26th, the mainstream steel mills in Hebei and Shandong markets raised the purchase price of coke, with a wet coke price increase of 50 yuan/ton and a dry coke price increase of 55 yuan/ton. Although there are still ideas of coke enterprises hoping to raise prices again, there has not been a clear statement so far. How will the coke market go in the future, and can it continue to rise in July?
From the perspective of supply and demand, this week Mysteel statistics for independent coke enterprises: the utilization rate of production capacity is 74.03%, an increase of 1.07%; the daily output of coke is 68.17, an increase of 0.99. Some new coke production capacities have been put into operation, and some coke enterprises have slightly increased production, and the supply of coke has been restored.
From the demand side, the daily output of iron water from steel mills is 2.3932 million tons, a decrease of 0.012 million tons month-on-month, and a decrease of 0.075 million tons year-on-year. The iron water of steel mills has fluctuated slightly, and the output of iron water has declined. According to Mysteel research, in July, there are plans to resume production in 9 blast furnaces, involving a capacity of about 30,800 tons/day; there are plans to maintain 10 blast furnaces, involving a capacity of about 45,600 tons/day. If the current production plan for suspension and resumption is followed, it is expected that the daily output of iron water in July will be 2.371 million tons/day; there is still an expectation of a decline in iron water, but the overall decline space is not large. In July, compared with the average estimated output of iron water in June, the production level is slightly reduced, but the decline is not much; the overall demand is basically the same as in June. The current supply and demand still maintain a tight balance state.
📉 The overall coke inventory of coke and steel enterprises continues to decline this week. Although the price has risen once before, the inventory of steel mills has not been effectively replenished, and it is still at a low level. Some steel mills' inventory has even dropped below the safety stock, which gives coke enterprises a certain confidence to raise prices. The overall coke inventory continues to decline, and the market is still in a stage of supply and demand mismatch. The tight balance of coke supply and demand has not been effectively improved. Coke enterprises have a low intention to resume production in the short term, and it is expected that the coke inventory will still have a certain decline space.
The off-season has arrived, and there is still room for the later apparent demand of steel. In terms of inventory, steel inventory continues to accumulate. Under the background of the weakening of the demand season, steel inventory will continue to accumulate. The contradiction between steel supply and demand is not obvious at present, but although the steel price has been boosted by the good news in the previous period, the price has moved up, but after the news, the off-season effect affects, and the steel price is still moving down. The profit of steel mills is gradually weakening, so although the raw material inventory of steel mills is not high, they still resist the rise in raw material prices.
Under the background of overcapacity of coking capacity, although the output of coke enterprises is not overcapacity, overall, the steel mill still has a large proportion of the right to negotiate coke. At present, in the stage of declining steel mill profits, although the supply and demand mismatch leads to a low level of steel mill inventory, the steel mill still needs to ensure its own profits. Therefore, although the market has been passing on the rise in the wind, considering the future market, the mainstream coke enterprises have not yet raised the price, and if the coke is raised, the coal price will continue to rebound. If the steel mill does not accept the coke price increase, the coke enterprise will further increase the loss, so the second round of price increase is shelved.
In summary: Although from the perspective of supply and demand, the inventory of coke and steel enterprises is low, it does indeed give coke enterprises a certain confidence to raise prices, but the steel season is weak, and the steel mill is not high in the intention to raise prices. In the short term, coke may operate stably.
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