With rising production costs, can coke market prices continue to rise?

In mid-August, the domestic coke market price began to rise after the previous continuous decline. Whether this round of rising prices can continue and how the coke market prices will move in the next few months has become a hot topic of concern to the steel and raw material industries. A few days ago, a reporter from "China Metallurgical News" interviewed traders and industry insiders to analyze and discuss the coke market.

Coke prices began to rise in mid-August. In the first half of this year, due to the impact of the new crown pneumonia epidemic, domestic coke production and prices fell. According to data from the National Bureau of Statistics, in the first half of 2020, my country's coke production was 228.86 million tons, a decrease of 2.5% year-on-year, which was 1.6 percentage points narrower than the decline in the first quarter. Among them, the coke output of steel coking enterprises was 54.677 million tons, an increase of 0.8% year-on-year; the coke output of other coking enterprises was 174.009 million tons, a year-on-year decrease of 3.5%.

Why is the price of coke rising?

What is the reason for the price increase in this round of coke market? The industry analysts believe that: coke companies control the release of production capacity, the growth rate of output has narrowed, and the coke inventory has declined. The manufacturers are optimistic about the market outlook and are more willing to stand up prices, which has pushed up coke prices.

According to the National Bureau of Statistics, in July 2020, the national coke output was 39.97 million tons, an increase of 0.3% year-on-year; from January to July, the national coke output was 268.95 million tons, a year-on-year decrease of 2.0%. By mid-August, the coke inventory of 100 independent coking enterprises had fallen by 40,000 tons to 226,000 tons, of which the decline in North China was significant. Traders are optimistic about the market outlook and are highly motivated to inquire and obtain goods. In addition, the coke inventory of some steel plants is at a normally low level, and there is a need to purchase replenishment. The coke inventory of 80 steel mills fell by 236,000 tons to 5.668 million tons, of which the coke inventory of steel mills in North China dropped significantly. Some coking companies have slowed down their shipments. In addition, due to the rainy season, transportation in some areas is restricted, coke arrivals from steel plants have declined, and coke inventories have continued to decline.