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SunSirs: Energy, The First Round of Increase and Decrease was Basically Completed, Coke Market Fell Sharply

February 28 2020 10:31:12     SunSirs (Selena)

Futures: Coke fell sharply on Thursday, closing 1805 (down 39), adding 476 positions and increasing trading volume. With the improvement of transportation environment and the resumption of production and work of upstream coal enterprises, the supply side is gradually relaxed; the steel inventory of downstream steel plants continues to increase, the demand for coke shrinks, and most coke enterprises have implemented the first round of 50% increase and decrease.

Spot: the coke market is weak as a whole, with the first round of 50% increase and decrease basically completed. Quotation of metallurgical coke: Rizhao first grade 1850, Tangshan second grade 1850, Linfen first grade 1750. In terms of coke enterprises, the scope of coal mines at the upstream supply end was further expanded, and the transportation environment was gradually improved. Some coke enterprises with large production restriction in the early stage have already increased production, and the capacity utilization rate and daily average output of coke enterprises have been improved. For the steel plant, the forced reduction of production due to the unsalable product and inventory pressure is still continuing, and the demand for coke is shrinking. Some steel plants have controlled the quantity of coke delivered, and the coke spot is under pressure for a short time.

Strategy analysis: under the current economic pressure, the government strengthened macro-control, increased counter cyclical regulation, loose policies to stabilize the market. The epidemic prevention and control measures have restrained the flow of personnel. In the near future, China has guided the orderly resumption of production, increased macro policies such as loose monetary policy and stable investment in infrastructure. The upstream coal mines gradually started to resume production and the coke supply turned loose. This year, the capacity reduction task in Shandong and other places has certain support for the low level of coke. Due to the impact of inventory pressure, unsalable finished products and cash flow, the downstream steel plants have more passive production reduction, and the demand for raw materials is expected to further shrink.

 

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