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SunSirs: Supply and Demand Situation still Exists, China Coke may Maintain Strong Fluctuation

June 29 2020 09:18:13     SunSirs (Selena)

Futures: Coke rose slightly on Wednesday, closing at 1,955.5 (up 7), adding more than 100 positions and reducing trading volume. At present, the blast furnace demand of steel plants is strong, and the coke inventory continues to drop; the coke enterprises in Shandong, Jiangsu and other places have limited production and de capacity policy fermentation, and the sixth round of price increase of more coke enterprises is 50 RMB/ ton, and the futures follow the logic of increasing valuation and concussion. Short term futures bear high prices, with strong support from the bottom.

Spot: the sixth round of national coke enterprises raised RMB/ ton of coke. The spot price of coke in Rizhao, Qingdao port and other places: quasi first grade coke 2,050, first grade coke 2,150; all including tax price. Shandong's coal production plan and coal consumption plan reduced by 10%, and the market remained strong due to the influence of Shandong, Jiangsu and other coke enterprises' production restriction and capacity reduction policies. The overall inventory of coke enterprises in Shanxi Province is low and the shipment is smooth; the blast furnace operation rate of steel plants remains high and the demand is strong; the supply and demand pattern is tight, and the port inventory reduction supports the market price.

Strategy analysis: COVID-19 is the main factor that affects the economic impact of the current financial and monetary easing and support. The restart of the economy in Europe and the United States boosted market demand expectations, the epidemic continued in the United States and other places, and there were potential risks of expansion, and crude oil shocks rebounded. We should strengthen macro-control at home and adopt strong and loose policies to stabilize economic growth. At present, the demand for coke continues to exceed expectations and the easing policy pushes up the expectation of spot price rise in the future. The logic of rising volatility in the valuation of futures is to prevent a short-term correction.


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