With rising production costs, can the price increase in the coke market continue?

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, and the rate of decline narrowed by 1.6 percentage points compared with the first quarter. Among them, the coke output of steel coking enterprises was 54.677 million tons, a year-on-year increase of 0.8%; the coke output of other coking enterprises was 174.009 million tons, a year-on-year decrease of 3.5%. Specific performance:

The domestic coke market price is at a low level. In the first half of the year, the average price of coke with a particle size greater than 40 mm was 1,816 yuan/ton, a year-on-year decrease of 10.7%, which was only 0.3% smaller than the first quarter; the average price of coke with a particle size of 25 mm to 40 mm was 1,734 yuan/ton , A year-on-year decrease of 11.9%, which was 0.7 percentage points smaller than the decline in the first quarter.

The pressure on coke sales has increased and the efficiency of coke production enterprises has declined. Shanxi Province, the main coke production area, achieved operating income of 83.28 billion yuan in the coking industry in the first half of the year, a year-on-year decrease of 15.6%; and realized a total profit of 2.49 billion yuan, a year-on-year decrease of 57.7%. However, some coke manufacturers in other regions have no profits or even made losses.

In July, the coke market fluctuated in weakness and downturn, and prices fluctuated and fell. According to feedback from traders, the price of coke in the coke market fluctuated and dropped in early July, and the purchasing prices of coke by iron and steel companies in Shanxi, Hebei, Shandong and other places continued to drop. Since then, for two consecutive weeks, the price of coke has been on a downward trend. Steel mills have lowered the purchase price of coke for three consecutive rounds, prompting an overall decline in coke market prices, with a total drop of 150 yuan/ton.