Currently, coke stocks in coking plants, steel mills, and ports are at their lowest level since 2010
The 5,500k price in Huanghua Port fell by 1 yuan/ton to 816 yuan/ton this week. The overall price deceleration rate began to slow down, and prices have basically begun to stabilize after Wednesday. Prices of low-calorie coal in the port have already increased one after another on Friday, which may indicate that the bottom of the overall thermal coal price is not far off.
According to the latest market research records, due to eight consecutive rounds of price cuts since the beginning of the year, coke stocks in coking plants, steel mills, and ports are currently at their lowest level since 2010; at the same time, coking coal inventory steel mills and independent coking companies are all significantly below the lowest level in June 2023. Currently, the “empty position” situation in the market is more complete.
However, for judging subsequent prices, there is actually no need to assume much demand: against the backdrop of extreme infrastructure+real estate demand in March, iron water production remained at the level of 2.2 million tons/day (currently rebounded to 2.25 million tons/day). Looking back at the demand background where the price of coking coal rose to 2,500 yuan/ton in '23, the production of molten iron was 24.0-2.5 million tons, which is about 10% higher than the current worst demand level.
Supply declined definitively in 2024: in January-February, the country's coking coal production was nearly 70 million tons, a year-on-year decrease of 7 million tons, a decrease of 9%. The supervision policy in Shanxi, the core production area, basically covers the whole year, and production safety is currently the number one priority.
At the same time, the March import data has just been released. The import volume for March was 41.38 million tons, which remained stable year on year. The growth rate declined sharply from the 23% increase in January-February, and it is difficult to judge the overall import volume to increase throughout the year.
Looking at overall supply, the contraction trend is already quite clear.
According to reports, the purchase price of coking coal in the Shanxi region has already risen by 50-80 yuan. The first round of coke is expected to increase by 100 yuan next week, and the price inflection point of the overall industrial chain is just around the corner.
Furthermore, with current extremely pessimistic expectations and lower inventories, the price catalyst brought about by future supply or demand may be stronger than in 2023. Agencies are optimistic that the 24Q4 coking coal price will surpass the 23-year high.
Companies related to the coal sector:
China Coal Energy (01898), Mongolian Coking Coal (00975), China Shenhua (01088), Yankuang Energy (01171), Yancoal Australia (03668), etc.