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SunSirs: The First Round of Increase and Decrease of China Coke Market Started Last Week, with Weekly Drop of 2.76% (July 6-10)

July 13 2020 10:36:08     SunSirs (Selena)

From July 6 to 10, 2020, the market price of coke in Shanxi region kept stable operation at the beginning of the week, and rose at the end of the week. The price was 1,813.33 RMB/ ton at the beginning of the week and 1,763.33 RMB/ ton at the weekend, with a decrease of 2.76% per week.

On July 9, the coke commodity index was 92.56, flat with yesterday, down 31.46% from 135.04 (September 13, 2018), and 167.13% higher than the lowest point of 34.65 on March 3, 2016. (Note: period refers to 2011-09-01 to now).

As of July 9 of last week, the first round of increase and decrease after the end of the first seven rounds of increase was fully implemented, with a reduction rate of about 50 RMB/ ton. From 0:00 on July 7, Rizhao Iron and steel Holding Group Co., Ltd. lowered the purchase price of coke by 50 RMB/ ton. Subsequently, Laiwu branch of Shandong Iron and Steel Co., Ltd. also announced that the purchase price of coke was reduced by 50 RMB/ ton. The first round of increase and decrease was started, and the major domestic markets followed the downward trend. In terms of supply, recently, the coking enterprises maintained a high starting level in the early stage, with high enthusiasm for shipment and good sales, and the overall inventory was at a low level. However, some coking enterprises slightly increased compared with the previous period when the supply was tight.

In terms of demand, the blast furnace operation rate of downstream steel plants is still high, and the demand for coke is good. In the early stage, more coke is purchased by steel mills, and the coke inventory of steel mills is rising recently. Most of the steel mills purchase slows down, and they are against the high price coke, so the coke market is under pressure.

Last week, the price of port fell, with the range of about 50 RMB/ ton, which was consistent with the range of spot market. By the end of the weekend, there were few port resources, limited transactions, and the port inventory was still low. As of the end of the week, the trading volume of the port market was slightly worse, and the quotation was temporarily stable.

In the future, SunSirs believes that with the first round of reduction, the mentality of downstream steel mills against high price coke is obvious. Although the reduction of 50 RMB/ ton will alleviate the cost of steel mills, some steel mills are still willing to lower the price. With the alleviation of coke supply problem, the market supply has slightly recovered, the steel mill inventory has increased compared with the previous period, and the steel plant procurement plan has slowed down, but there is still some demand support. It is expected that the high consolidation in the future is the main factor, with a possibility of a small reduction.


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