SunSirs: The Fourth Round of Price Increase of Coke Opened last Week (June 1-5)

From June 1 to 5, 2020, the price of coke market in Shanxi Province kept stable operation at the beginning of the week, and rose by 1% at the end of the week. The price at the beginning of the week was 1,663.33 RMB/ ton, and at the end of the week was 1,680 RMB/ ton.

On June 4, the coke commodity index was 87.31, unchanged from yesterday, down 35.35% from 135.04 (2018-09-13), the highest point in the cycle, and up 151.98% from 34.65, the lowest point on March 3, 2016. (Note: cycle refers to 2011-09-01 to now).

As of last Friday, most regions have implemented the coke price increase, with the increase range of about 50-100 RMB/ ton. On June 4, Xuzhou took the lead in opening the price adjustment last month, with the increase of 100 RMB/ ton. The policy of coal production is further implemented in Shandong Province. At present, there are 24 million tons of coal productions in Shandong Province. In the later stage, nearly half of the production capacity is gradually limited. The overall coke inventory in Shandong Province is low, the sales situation is good, and the local supply is in short supply. In addition to the limited production in some parts of Shanxi Province, the coke enterprises in other parts of the country have a high operating rate and stable production. At present, most of the sales are to give priority to regular customers.

In terms of demand, the blast furnace operation of downstream steel plants is still high, and the "two sessions" benefits are gradually released. Previously, the blast furnace operation rate of steel plants has been maintained at more than 90%, and the demand for coke is good. In Jiangsu and Shandong areas, there is an external coke mining situation, local market supply is tight, and the demand for coke is well supported.

Last week, the port price slightly increased, with an increase of about 50 RMB/ ton. Affected by the domestic multiple production restriction policy, some traders are reluctant to sell. Recently, the local coke price has been rising all the way, and the price advantage of imported coke has begun to appear. In the near future, the market inquiry atmosphere is relatively strong.

Market Forecast

According to SunSirs, at present, there are more limited production areas in China, and the local supply of coke in East China is in a serious tense situation. With the further expansion of supply gap, the coke demand of downstream steel plants is just high and stable. However, due to the high cost pressure of both iron ore and coke in the near future, the steel plant may enter a high consolidation trend in the short term. It is expected that the coke price will be stronger in the future and stronger in the fourth round of price increase. With the implementation of production restriction in place gradually, there is still a possibility of slight increase in subsequent prices.

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