Since the second half of November, driven by the continuous rise in coke prices, the coking coal market has rebounded strongly. Near the end of the year, the demand for inventory replenishment and the increase in coking coal resources are limited, and the strong performance of the coking coal market will continue.
This round of coke prices has been raised for three rounds, with a cumulative increase of 300 yuan (quasi first-grade coke with wet quenching), and the fourth round of price increases in some areas has landed. The average profitability of coke enterprises is still at -22 yuan/ton. Although it has improved, it is still difficult to get rid of the loss situation. The price increase of coking coal is later than that of coke, but due to tight resources, the frequency of price increase is relatively fast. The spot price of low-sulfur main coking coal (S0.8%G85A10.5) is 2,500 yuan/ton, which also makes the profit margin of coke price increase , compressed by rising coking coal prices.
The factors driving this round of coal and coke upwards are still lacking in the improvement driven by downstream demand, but the contradiction between the demand for coking coal replenishment and tight coking coal resources, the contradiction between low coking coal inventory and the expectation of coal mine production reduction, and this contradiction will be in 2023 during the Spring Festival. Before and after is still the dominant factor in the market.
The production of coal mines in Shanxi continues to be affected by the epidemic. Some mines have more positive cases, a large number of miners cannot return to work normally, and the number of workers in some mines is less than 50% of the daily work. They are forced to take measures to suspend or reduce production, making it difficult to effectively organize production. On-site production cannot be solved by home office. In addition, as the end of the year is approaching, coal mine production has entered the off-season every year, and the supply of coking coal in producing areas will inevitably be reduced. It is understood that the situation that some mines cannot produce normally due to the impact of the epidemic has not been completely reversed.
Determining the final direction of the industrial chain depends on the performance of downstream terminal demand. We have observed that while the price of coke has increased, the price of steel has also been adjusted to varying degrees, but compared with coke, the range is much smaller. This shows that the downstream final demand has not been effectively released. According to the analysis data, the weekly thread gross profit loss has narrowed, but the loss rate is still -240 yuan/ton. This shows that the confidence of steel enterprises in the future is still insufficient. Although the daily output of molten iron is 2.229 million tons, there is still room for improvement, but in the off-season of terminal consumption, it is impossible for steel mills to use full power to increase production and accumulate inventory, and only to reduce inventory to maintain the minimum production demand. The degree of terminal demand recovery in the later stage determines the direction of the industrial chain.
Recently, as the relationship between Australia and China has shown signs of improvement, and the resumption of trade between the two sides has been put on the agenda, everyone is full of expectations for the liberalization of Australian coal imports. As long as there are market inquiries, Australian coal has stopped falling and stabilized. It can be seen that China’s influence on Australian coal is still a factor that cannot be ignored. In the past three years that Australian coking coal has not been imported to China, it is catching up with the conflict between Russia and Ukraine. The export of Australian coking coal has not been seriously affected. However, China is short of Australian coal, and the price of coking coal has always remained high. It can be said that if the import of Australian coal is released, it will effectively increase the high-quality domestic coking coal resources and play a role in stabilizing the coking coal market. According to the current Australian coal price conversion, the coking coal warehouse receipt 05 contract should be around 1769 yuan. Obviously, the coking coal market still has room to fall under the expectation of liberalizing Australian coal imports. Although the imports of Mongolian coking coal and Russian coking coal accounted for more than 67% of domestic coking coal imports from January to October, there is a certain gap between the strength and coking properties of Australian coal and steel mills in coastal areas. The demand for Australian coal imports is more urgent.
Recently, the National Bureau of Statistics announced various economic indicators for November, from which we can see that the macro economy is still in a sluggish performance, and some data are not optimistic! From January to November, the added value of industrial enterprises above designated size increased by 3.8% year-on-year, and the added value of the mining industry increased by 7.6% year-on-year. Real estate continued to fall sharply, and development investment fell by 9.8%. The sales of commercial housing were 11,864.8 billion yuan, down 26.6%. From January to November, the national fixed asset investment (excluding rural households) was 52004.3 billion yuan, a year-on-year increase of 5.3%, which can be regarded as a bright spot in stimulating the economy.
On December 15, the Central Economic Work Conference was held in Beijing. The meeting said that the overall economic operation is expected to pick up next year. The meeting emphasized “focusing on the work of stabilizing growth, employment, and prices”, and stabilizing growth has been placed in a more prominent position”. After three years of epidemics, economic development has passed the worst stage, but the direction of economic development will be Promote the virtuous circle of “technology-industry-finance”. Optimize the implementation of industrial policies, pay close attention to the transformation and upgrading of traditional industries and the cultivation and growth of strategic emerging industries, and strive to strengthen weak links in the industrial chain. Forging new industrial competitive advantages in China. The development of the coal, coke and steel industry chain is not to make a fuss about the volume, but to integrate into the high-end industry to find development opportunities. According to the analysis, with the adjustment of the national development industry support policy , There is limited room for a substantial increase in steel production, and the amount of coking coal resources has increased under the expectation of imports. The profits of the coal, coking and steel industry will become more reasonable and balanced.