Hot metal enters the production reduction cycle, and the demand for coking coal and coke weakens

This week, the double coke industry experienced a significant decline. On the one hand, some coal mines in Shanxi resumed production, and the proportion of coking coal in imported Mongolian coal increased. There is still a possibility of further increase in the future, and the supply is expected to show an increasing trend; On the other hand, the off-season expectation is that the production of molten iron will reach its peak in stages, and the demand for coal coke will gradually decline, resulting in a weakening expectation of demand. Next week's expectation continues the off-season expectation, and there is still a possibility of a decline in the dual focus.

Coke demand:
The off-season expectation has led to a slowdown in the social replenishment of steel, a decrease in steel trading volume, and a decline in coal coke demand. This week's steel plant profit margin27.71%, month on month decrease10.82%The internal power of the steel plant has weakened, and it is expected that the production reduction will continue. Daily average production of molten iron236.3810000 tons, month on month decrease1.67Ten thousand tons, the production of molten iron has reached its peak in stages, and may show a downward trend in the short term, resulting in a decline in actual demand for coal and coke.

Coke supply:
The steel mills are still in a loss making state, and their production enthusiasm is not strong. Due to high coal prices and high raw material costs, the steel mills lack the motivation to replenish inventory, and the daily coke production is consistent with the iron production, resulting in a decline; The profits of coke enterprises are also below the zero axis, with high production costs and poor downstream purchasing willingness. Coke enterprises lack the willingness to accumulate inventory, resulting in a decrease in daily output. Next week, it is expected to continue this pace of production reduction and maintain low supply.

Coke inventory:
This week, coke inventory has once again declined. In the context of poor demand expectations, the entire industry chain has slowed down the pace of raw material procurement and product production, mainly consuming existing inventory. There is a possibility of a new low in coke inventory. The main reason is still the uneven distribution of profits in the industrial chain, with profits concentrated in coking coal, while steel mills and coking enterprises are facing losses. Currently, the raw materials of steel mills and coking enterprises are high costs, and there is a possibility of subsequent profit redistribution. The costs of steel mills and coking enterprises may be compressed, so the strategy of maintaining low inventory may be difficult to change in the short term.

Coking coal supply:
The clearance volume of Mongolian coal this week has decreased compared to last Sunday46Car, but the proportion of coking coal is starting to increase, and there is still a possibility of further increase in the future; The recent disturbance of the epidemic on Mongolian coal still exists, and there is no sign of relaxation in port transportation. We still need to keep an eye on it next week. The coal mines that were suspended due to the conference in the early stage in China have gradually resumed work, and some open-pit coal mines in Shanxi have also resumed production, with an overall expectation of increased supply. Meanwhile, high coal prices have once again attracted government attention, and the market is concerned about repeating last year's concerns10The logic of the month is that the bulls lack confidence. Overall, there is a trend of easing the shortage of coking coal.

Coking coal inventory:
]This week, coking coal has shown a trend of destocking. Although the production of coal washing plants has increased, downstream consumption is still relatively high due to the current high iron production. The destocking of coking enterprises and ports is more obvious. There is a high possibility of a continued decline in molten iron production next week, but the year-on-year level remains high. There is still a high expectation for raw material consumption, and although there is an increase in supply, the growth rate may be slow. In the short term, there is still a possibility of destocking. However, in the medium to long term, the production of molten iron may gradually decline, demand may weaken, and supply may increase, leading to a gradual increase in coking coal inventory.

Future outlook:
The proportion of coking coal in Mongolian coal imports has increased, and coal mines in Shanxi and other regions in China are gradually resuming production. The supply of coking coal is steadily increasing, and there is a high possibility of continuing this trend in the future. The downstream production of molten iron has started to decline month on month, but it is still at a high level in the short term, so the consumption of raw materials is still relatively high in the near future. However, in the medium to long term, as it gradually enters the off-season, the possibility of a reversal in molten iron production is relatively small. If the logic of reducing production continues, the demand for coal coke may gradually weaken. Overall, there is a steady increase in supply in the future, with a phased decline in demand. There is a high possibility that the dual focus market will continue to decline. It is recommended to continue holding short positions.

Please pay more attention to market changes and control your position well!