1. Coke Market

1.1 Market in Brief

Domestic coke market didn’t fully recovered last week, and price of coke was mainly stable. According to research and survey, the total coke production plunged dramatically, and coking plants’ production limitation ranged from 10% to 70%. But regional differences in coke market were evident. A few coking plants in Shanxi cut production by 50%, and a minority cut by 30% resulting from limited coking coal supplies. Coking plants depending on train delivery have little pressure from coke inventory. The reason why most coking plants in Eastern China cut production by 10%-30% is because their coke inventory was overpiled and truck/ship delivery was delayed severely.

1.2 Purchasing Price by Steel Mills

This week, purchasing price of coke by domestic steel mills maintained unchanged. No adjustment was made.

1.3 Coke Production and Selling

Inventory: Coke inventory in 227 coking plants increased by 50,000 tons to 0.601 million tons; that in 80 steel mills decreased by 0.225 million tons to 5.676 million tons, with monthly demand for coke keeping dropping by 4,4000 tons to 10.881 million tons. Number of steel mills cutting production continued to increase, and some steel mills whose production was uncut said they have to relieve inventory pressure by cutting production until the epidemic has been fully curbed. Inventory at ports continued to decrease, and inventory at four ports dropped by 0.11 million tons to 28.6 million tons on February 13.

Operation: Capacity utilization rate in 227 coking plants fell by 2.33% to 66.75%, which continued to drop. As the transportation system hasn’t returned back to normal and delivery and procurement were limited, coking plants put much more effects to cut production.

1.4 Forecast for the Week Ahead

It is expected that coke market in this week will be mainly steady, but the pressure of downward trend will increase.

1.5 Focus on This Week

The control of the novel coronavirus; the recovery of traffic system; resumption of production in coal mines; operation of steel mills and coking plants as well as inventory; and sales of steel materials and overpiled inventory.

1.6 Favorable/Unfavorable Factors and Trading Tips

Unfavorable factors: Some steel mills planned to intensify production limitation, and their demand for coke will be lowered; and sales of steel materials stagnant with inventory keeping piling.

Favorable factors: Price quoted by coking coal rose and cost thereof was underpinned; coking plants’ production limitation continued to intensify with production shrunk.

Trading Tips: In spot market, coking plants should cut or intensify production on their own and clear out coke inventory instead of procuring coke of high price. Traders should sell and purchase supplies timely, such that inventory at hand declined.

2. Coal Market

2.1 Coking Coal Market

The prevailing price of domestic coking coal was robust amid stability. From the last four quarters, coal mines safety has been in bad situation. Affected by the epidemic, coal mines’ work resumption was limited. Currently, domestic coking coal supplies were tight. It is expected that price of coking coal will be robust amid stability.

Price of imported coking coal rose amid stability. On February 9, Mongolia issued a notice on closing 288 ports due to the epidemic. In Northern ports, Australia coking coal supplies in spot market dropped drastically; price of standard I Australia coking coal rose by 30-50 yuan/t to 1480-1500 yuan/t, and standard II Australia coking coal stabilized at 1300-1320 yuan/t.

Trading Tips: Coal mines should be actively in coordinating with the local governments to realize work resumption as soon as possible and fully ensure the supplies for downstream customers. Traders should sell and purchase supplies timely to clear out inventory at hand. Downstream steel mills should add more tunnels for procurement to protect production, and be cautious in procurement of coking coal of high price, and adjust the proportion of non-premium coking coal reasonably.

2.2 PCI Market

Domestic PCI market was stable. Price of PCI on a long term contracted basis quoted at large mines was stable. Price of PCI quoted at local coal mines in Changzhi, Shanxi province rose by 20-30 yuan/t. Some steel mills keet putting up the purchasing price. It is expected that the prevailing price of PCI in the market will maintain unchanged this week.

Trading Tips:

The market was robust amid stability on the whole, so it is suggested that steel mills should focus on production, and steel mills with low inventory can add appropriate purchasing volume. Coal mines should deliver supplies timely.

2.3 Thermal Coal Market

Domestic thermal market rose amid stability. In Northern port, thermal coal supplies continued to drop with proportion shrunk drastically, and price quoted by traders kept rising. It is expected that price of thermal coal this week will be robust amid stability.

Trading Tips: