A few days ago, coke started the fourth round of price increase. After the first three rounds of increases, the current spot price of coke has risen by 300-330 yuan/ton as a whole. Some analysts believe that with the continuous release of favorable policies in the near future and the superimposed demand for phased winter storage and replenishment, the price of coke is still easy to rise but hard to fall in the short term. At the same time, due to the impact of favorable macro policies, the market’s expectations for the coking industry next year have increased, and coke is still expected to increase strongly.
Operating rate rises
On December 16, a coke company in Changzhi, Shanxi raised the price of coke, and CDQ increased by 110 yuan/ton, and it will be implemented from December 16.
It is understood that with the continuous optimization of the epidemic prevention policy, the logistics and transportation have gradually returned to normal, the raw materials of coke enterprises in various places have arrived smoothly, and the price of coke has risen and landed after three rounds, and the profits of coke enterprises have been restored. According to industry insiders, the current operating rate of coking enterprises has begun to rise, the coke inventory in the plant is generally low, the industry’s profit center has moved up, and the enthusiasm for starting work is high.
Mysteel research shows that in terms of steel mills, the coke inventory is mostly at a low level, while the price of finished products is rising steadily, and the profitability of steel mills continues to recover. Considering the demand for replenishment in winter, steel mills are more active in purchasing, and the coke market is stable and relatively strong in the short term.
tight supply
The increase in coke prices is related to factors such as rising prices of upstream raw materials.
In terms of raw materials, many producing areas and ports have successively adjusted the price of coking coal. The rise in raw material prices was mainly due to tight supply. According to industry insiders, there is no significant increase in the production of coal mines in the main producing areas, and the supply of coking coal market continues to be tight, and the release of output is limited. At the same time, the overall demand in the downstream market is relatively strong, and the tight supply of coking coal is difficult to be significantly alleviated for the time being, resulting in the overall tight supply of coking coal.
The data shows that on the supply side, since December 16, some coke companies have started the fourth round of coke price increases, the market sentiment is positive, the enthusiasm for coking coal procurement remains undiminished, and the auction market has a good trading atmosphere.
On the downstream side, the overall inventory of steel mills is low, and they are generally active in purchasing. Some steel mills with small stocks in the early stage have short-term inventory recently, and the demand for coke products has further increased.
Profit expected to strengthen
In this year’s shock adjustment market, the profits of many coke companies have weakened. Taking Shaanxi Black Cat as an example, the company achieved operating income of 17.949 billion yuan in the first three quarters, a year-on-year increase of 22.19%; the net profit attributable to shareholders of listed companies was 240 million yuan, a year-on-year decrease of 82.07%. The year-on-year decrease in profits of coke companies was mainly due to the fact that the year-on-year increase in the price of coke, the company’s main product, was lower than the increase in the price of clean coal, the raw material.
Shanxi Coking also stated in its third-quarter report that in the first three quarters of 2022, due to factors such as the Spring Festival, energy consumption control, and environmental protection and production restrictions, the coal, coke and steel market presents a structurally tight pattern, but the industrial chain profits vary greatly. The profits of steel mills and coke enterprises are at a low level in recent years.
Under the background of poor profitability of the main products, many coke enterprises accelerated the pace of industrial upgrading. Shanxi Coking announced on October 24 that the company’s controlling shareholder Shanjiao Group integrated the coke production capacity of Shanxi Hongdong Economic and Technological Development Zone (Zhaocheng Park) to promote the implementation of a 1.44 million tons/year coking upgrading project, and Shanxi Coking was the main body of implementation .
Industry insiders said that in the context of the recent rise in the coke market, the profitability of coking companies is expected to boost.
(Editor in charge: Yin Junhong)