China's coke prices presented a strong rally from August to December last year, as intensifying capacity cut on inefficient coke ovens significantly broke the balance of supply and demand.
Coke prices had surged for 11 straight rounds with accumulative increase of 600 yuan/t over mid-August to the end of 2020, presenting a sharp contrast to the range-bound trajectory in earlier months.
Sustaining short supply of the steel-making material continues to keep coke producers' strong says in pricing.
Throughout 2020, coke prices fluctuated in a significantly wider range than in 2019.
Coke prices notched a one-year-plus high by the end of the December under the background of continuous elimination of coke ovens with chamber height at 4.3 meters and below, coupled with stronger-than-expected demand in downstream sector, sending coking profit significantly higher, especially during the final quarter.
The price peak of Quasi Grade I coke in Luliang of Shanxi was recorded at 2,250 yuan/t in 2020, surging 250 yuan/t compared with 2019, while the lowest level in 2020, at 1,470 yuan/t, was down 80 yuan/t compared with the preceding year, showed data from sxcoal.com.
The average price of Quasi Grade I coke stood at 1,721 yuan/t in Luliang of Shanxi in 2020, still 3.6% or 65 yuan/t lower compared with that in 2019, data showed.
In retrospect, the outbreak of COVID-19 pandemic at the beginning of the year dealt a severe blow to the global economy. Encouragingly, Chinese economy presented strong resilience, with a rapid recovery in industrial activities.
China's steel demand had maintained a high growth since June to the end of the year. Output of crude steel and pig iron continuously broke previous records, leading to robust consumption for coke. However, coke supply was constrained due to strict capacity reduction and lagged new capacity release.
The trend in coke-to-pig iron output rate can also reflect the tight supply situation.
China churned out 431.70 million tonnes of coke during January-November 2020, down 0.2% year on year, while pig iron production climbed by a significant 4.2% during the same period, according to the National Bureau of Statistics.
The coke-to-pig iron output rate was calculated at 0.531 during the first eleven months last year, well below the ratio at the start of the year.
The downward ratio suggested it would take longer time to bring supply and demand back into balance.
The first work day in 2021 saw a 13th round of coke price hike proposal by 100 yuan/t, bringing the total increase to 800 yuan/t since mid-August. The increase has been accepted by some steel makers as of the writing.
So, what the market will be like in 2021, and will the red hot streak continues?
Fenwei timely releases "2020 China Coke Market Study and 2021 Outlook", to review and interpret important policies affected coking industry operation in 2020, and also provides detailed analysis and forecast in 2021 centering on policy environment, demand, production, supply, price, import & export, etc.
The report incorporates abundant data, figures and technical parameters in clear analytic logics and viewpoints, which shall definitely act as a valuable reference for market participants to become versed in the development trend of China's coking industry.
(Writing by Emma Yang Editing by Tammy Yang)
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