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SunSirs: Energy, Return to Work is Expected to Pull up Black Energy, Coke Continued Strong Volatility

February 12 2020 10:23:53     SunSirs (Selena)

Futures: Coke rose sharply on Tuesday, closing 1,855 (up 56), adding more than 8,000 positions and increasing trading volume. At the same time, the epidemic affected the raw coal at the upstream supply end of coke and the building materials at the downstream demand end. The shortage of coking coal supply continued to strengthen, which led to a substantial increase in coke today.

Spot: the coke market is mainly stable, and the quotation of quasi first-class metallurgical coke is 1,900 RMB/ ton for Rizhao Port, 1,800 RMB/ ton for Shanxi, 1,960 RMB/ ton for Tangshan. Affected by the spread of COVID-19, at present, most coal mines in the upper reaches are delayed to start construction, the supply of coking coal is in short supply, the coke inventory in the coke enterprises is accumulated during the holidays, and the limited transportation results in the decrease of the arrival of coking coal in some coke enterprises, so as to ensure more limited production in the later stage. In terms of steel plants, the coke inventory continued to decline, but most of the steel plants did not significantly increase the demand for coke, and there was still uncertainty about the start-up and transportation conditions. In the later stage, there were plans for continuous production reduction and maintenance, and the coke operation was temporarily stable in the short term.

Strategy analysis: at present, the government has strengthened macro-control, increased counter cyclical regulation, and relaxed policies to stabilize the market. The unfavorable start of the first quarter of 2020 has been determined. The national epidemic prevention and control measures for COVID-19 have significantly inhibited the flow of people and put pressure on the screw steel. Meanwhile, the coke production, logistics and transportation will also be affected by the epidemic and face the expectation of supply side contraction. Screw steel supply and demand mismatch is certain, short-term product decline, steel production will suppress the rebound space charge. After the epidemic situation is effectively controlled, the rebound of production demand will drive the market of raw materials higher.


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