Original Title: Market Expected Style Change Coking coalRisk of falling back
1. Market review
Coking coal prices rose sharply in July, with frequent policy disturbances, but the fundamentals were strong, supply guarantee measures were difficult to implement, and the control effect was not good. The black group is hot, and the coking coal breaks through a record high. At the end of the month, the Politburo meets to regulate commodity prices. There is a risk that coking coal will fall sharply. The current supply of coking coal is still tight, inventory continues to deplete, and supply exceeds demand. Imported Australian coking coal is completely closed and Mongolian coal imports. Less than 200 vehicles are cleared daily, and imports are blocked. The operating rate of downstream coking plants was under-operated due to the double-high production restriction. The demand of downstream steel mills was restricted due to the policy of reducing crude steel production capacity, the steel stocks continued to rise, and terminal demand was sluggish. In July, the price of coking coal was speculatively vigorous, and the policy was suppressed, and the effect of the national supply guarantee policy gradually appeared. The main contradiction on the supply side was expected to ease, and the contradiction gradually shifted to the demand side. The main coking coal contract on the disk in July closed at 2317 yuan/ton, an increase of 372.5 yuan, an increase of 19.16%, and an amplitude of 26.48%. The spot price was stable at a high level, and the main coking coal price of Jingtang Port was RMB 2,600/ton in July.
Figure 1 The main contract trend of coking coal
Data source: Wind, Guodu Futures Research Institute
Figure 3 Coking coal main contract basis
Data source: Wind, Guodu Futures Research Institute
2. Fundamental analysis
(1) Supply side
Supply: The operating rate of 110 coal washing plants nationwide is 71.04%, an increase of 5.40% from the previous period; the average daily output is 590,600 tons, an increase of 41,800 tons; the operating rate of coal washing plants has rebounded, and the supply of coking coal is still tight, and it is expected to ease.
Figure 4 Coking coal output and year-on-year growth rate
Data source: Wind, Guodu Futures Research Institute
Figure 5 Coking coal imports and year-on-year growth rate
Data source: Wind, Guodu Futures Research Institute
Figure 6 Distribution of the main source countries of coking coal imports
Data source: Wind, Guodu Futures Research Institute
Figure 7: Annual comparison of coking coal imports
Data source: Wind, Guodu Futures Research Institute
(2) Demand side
A sample of 230 independent coking companies across the country: the utilization rate excluding the eliminated capacity was 82.38%, a decrease of 1.61% from last week; the average daily output was 591,500 tons, a decrease of 11,600 tons;CokeThe inventory was 631,000 tons, a decrease of 56,100 tons; the total coking coal inventory was 12.319 million tons, a decrease of 231,500 tons, and the average available days was 15.59 days, an increase of 0.01 days. The operating rate of coke enterprises is high and stable. Mysteel surveyed 247 steel mills with a blast furnace operating rate of 74.35%, a decrease of 1.30% month-on-month and a year-on-year decrease of 16.80%; blast furnace ironmaking capacity utilization rate was 86.83%, a month-on-month decrease of 1.21%, and a year-on-year decrease of 7.67%; steel mill profitability was 86.15% , A month-on-month increase of 1.73% and a year-on-year decrease of 8.23%; the average daily hot metal output was 2.3113 million tons, a month-on-month decrease of 32,200 tons and a year-on-year decrease of 204,200 tons. This week, the country’s main steel social stocks were 14.518,800 tons, a decrease of 853,700 tons from last week, and a decrease of 2,700,300 tons from last month;RebarThe total inventory is 7,805,800 tons. Terminal demand is sluggish.
Figure 8 Coking coal consumption
Data source: Wind, Guodu Futures Research Institute
Figure 9 Annual comparison of coking coal consumption
Data source: Wind, Guodu Futures Research Institute
(3) Inventory
Port 372 (-13), coking plant 744.91 (4.68), steel plant 731.12 (-15.98). Port inventory has declined, coking plants and steel mills have rebounded, and downstream demand is not good.
Figure 10 Stocks of coking coal in major ports
Data source: Wind, Guodu Futures Research Institute
Figure 11 Seasonality of port coking coal inventory
Data source: Wind, Guodu Futures Research Institute
Figure 12 Coking coal inventory of independent coking plants
Data source: Wind, Guodu Futures Research Institute
Figure 13 Coking coal inventory of sample steel plants
Data source: Wind, Guodu Futures Research Institute
(4) Arbitrage opportunities
The current J/JM futures price ratio is 1.368, which has fallen back to a normal level. There are not many other intertemporal arbitrage opportunities. It is recommended to wait and see.
Figure 14: The main contract price ratio of coke/coking coal
Data source: Wind, Guodu Futures Research Institute
Figure 15 Coking coal period difference 01-05
Data source: Wind, Guodu Futures Research Institute
Figure 16 Coking coal period difference 05-09
Data source: Wind, Guodu Futures Research Institute
Figure 17 Coking coal period difference 09-01
Data source: Wind, Guodu Futures Research Institute
3. Outlook
Spot prices across the country remained high in July, and the basis weakened. The overall start of coal washing plants across the country has picked up, and the current situation of insufficient coking coal supply is expected to ease. The Development and Reform Commission and other three departments: implement capacity replacement commitments for nuclear increase of coal mine capacity. The capacity replacement can be carried out in a promised way, and the capacity replacement plan can be completed within 3 months after the approval of the capacity increase is obtained. In July, the Inner Mongolia Autonomous Region resumed full production of the Ordos open-pit coal mine and is speeding up the divestiture. It is expected that actual output will be formed in early August, and initial results have been achieved from the policy level to the concrete implementation of coal supply guarantee measures. The market anticipated a change in style, gradually ensuring supply from short supply, and coking coal prices fell in response to night trading. This week, the downstream start of coking plants across the country has dropped, and coking coal inventories have been eliminated. Inventories of coking coal have remained low, and inventories have continued to decline. The inflection point is expected to come. Coking coal once again set a new historical high, and the risk of high-level policy regulation has intensified. The main contradiction of coking coal lies in insufficient supply. In the long run, downstream demand is poor, and there is a risk of high-level policy regulation. Multi-channel supply guarantee measures are implemented steadily. The market expects style changes. Focus on coal supply guarantees in various regions. Coking coal is at risk of continuing to fall. It is recommended to lay out empty orders on rallies. (Risk warning: the guarantee policy is not as good as expected)
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