At present, the profit of the coking plant is relatively good, and the operating rate is generally at a high level, which to a certain extent reflects the good performance of downstream demand. In addition, the continuous decline in port coal inventory also supports coal prices. On the whole, if there is no sudden change in the macro fundamentals in the fourth quarter, downstream demand is expected to maintain a good momentum, which will further promote the continued strength of coking coal.
High profits for coking companies
According to my survey on Iron and Steel.com, as of September 18, the average profit of 30 independent coking companies across the country was 314 yuan/ton, and the profit in the same period last year was 75 yuan/ton, which is 34% higher than the average profit of the sample coking companies in the past three years. The coke capacity utilization rate of 230 independent coking companies nationwide was 77.57%, which was 2.23% higher than the previous year and 2.07% higher than the average. The overall profits of coking companies are at a relatively high level, the production enthusiasm is high, and the demand for coking coal is good.
Data shows that from September to November, the new coke production capacity was 15.48 million tons, the coke production capacity was 7.32 million tons, the net increase was 8.16 million tons, and the coking coal demand increased by 10.61 million tons. In December, 22.14 million tons of coke production capacity was net eliminated. It is estimated that the eliminated production capacity will be concentrated in the second half of December, and the impact of coking coal 2101 contract demand will be limited.
Exhausted quota for imported coking coal
Our country adopts a quota system for seaborne coal imports. Coking coal importers are mainly steel mills and large coking plants, and traders are relatively limited in trade volume. Generally, enterprises with import quota application qualifications apply for quotas for the next year at the end of the year, and the final quotas allocated to the enterprise depend on the completion of the quotas in the previous year and the actual demand in the next year. From January to July, due to the sharp decline in global pig iron production except China, and the decline in coking coal demand, the price of Australian coking coal is much lower than that of domestic coal, and the import profit is relatively large. Steel mills and traders are more enthusiastic to buy Australian coking coal. Importing Australian coking coal year-on-year Increase by 55%. Many end-users have used up their quotas for importing coking coal, and it is expected that imports of Australian coking coal resources will drop significantly in the fourth quarter. Mongolian coal imports are mainly transported by road and rail, and are not subject to import quotas. However, even if imports of Mongolian coal increase in the fourth quarter, considering that my country’s Australian coking coal imports account for 63%, it is difficult for the increase in Mongolian coal to offset the reduction of Australian coal. Imported coal resources will tighten overall in the fourth quarter.
Seasonal winter storage brings support
The coal resources in the north of my country are abundant, while the coal resources in the south are relatively scarce. Therefore, the coal market in my country presents the characteristics of coal transportation from north to south. Cold weather will inevitably affect coal mining, which will lead to a tightening of coal supply, and cold weather will also affect coal transportation. Therefore, steel plants and coking plants in my country generally store coal in the fourth quarter of winter. The coking coal inventory of steel mills and coking plants is at a relatively high level this year, but there is still a certain distance from historical highs. In the fourth quarter, steel mills are expected to adopt certain winter storage behaviors to ensure production and prevent transportation risks. The contract price of coking coal 2101 Form support.
As of September 18, the four major ports imported coking coal inventory of 3.89 million tons, a year-on-year decrease of 40.1%. Port coking coal inventory was significantly lower than the level of the same period last year, forming a strong support for prices.
Investment logic and operation strategy
The investment logic is mainly based on the following aspects: First, the net production capacity of coke from September to November this year was 8.16 million tons, and the consumption of coking coal will increase by 10.61 million tons. Second, the 2101 contract of coking coal for winter storage of coal forms support. Third, the quota for imported coking coal has been exhausted. In the fourth quarter, the import of Australian coking coal resources is tight, and the proportion of imported Australian coal is large. It is difficult for the increase of Mongolian coal to offset the decline of Australian coal. Fourth, the continued decline in port coal inventory has supported coal prices.
Source: Chemical Network
