Coke as a whole is easy to fall but difficult to rise, and should hold a cautiously optimistic view in the short term
2023/6/12
Recently, coke futures bottomed out and rebounded. From the technical point of view, the expectation of real estate policy heated up at the beginning of June and the market confidence in the terminal industry increased, coupled with the expectation of steel mills in Hebei area to reduce production, coke bottomed out since June 1. However, there is no obvious sign of improvement in the fundamental weakness for the time being, and the current supply and demand pattern will further drag the market to a significant retracement, and whether the subsequent boost will also depend on the implementation of the actual policy. In our opinion, we should be cautiously optimistic in the short term, and we can consider short shorts in the medium term. Overall, coke is easy to fall but difficult to rise.
Inventory is at a relatively high level
In recent years, coking capacity has been in a relative surplus stage, and as the process of eliminating 4.3m backward coke ovens in Shanxi, the main production area, coke enterprises have been adopting the approach of "closing the small ones on the big ones", and the capacity has been in an incremental stage. In the medium term, the off-season market still dominates the market, real estate sales data is not significantly improved, steel transactions are more dependent on policy to boost the mood. Overall, we believe that the fundamental contradictions are still not reversed, and the relatively high start-up rate and pressure on coke enterprises to depot will weaken the upward driving force of the coke plate.
In terms of downstream, low inventory is maintained, and just-in-time procurement is the main factor. After the "May Day" festival, the demand is still difficult to be released, steel prices have fallen, steel futures have sunk, and the flooding period has affected the construction, which further dragged down the turnover, steel mills are mainly running with low inventory, and a small rigid replenishment was carried out at the end of May. In the recent week, as steel prices rebounded, steel mills' profits repaired significantly and their willingness to suppress coke declined, with spot prices stabilizing after ten rounds of coke mentions landed. However, the contradiction between terminal supply and demand is still not eased, and the steel mills' profit repair is not sustainable, and the mills maintain very low inventory.
As for steel mills, at the beginning of the second quarter, iron production remained high in anticipation of the peak season, and steel mill starts continued to rise at a high level. But the housing market data weakened, steel mills profit contraction serious, some steel enterprises into losses, steel supply reduced, the top of the iron production back down. With the end of the "Silver Four", the peak season demand was falsified and steel mills' profit contracted gradually. On May 26, the apparent demand for steel dropped to the lowest since March, and the off-season consumption characteristics are obvious, with high pressure on shipments. From the agency data, weekly production and inventory of rebar both down, profits are difficult to say obvious repair, steel continuous price drop after part of the price of finished goods lost price advantage, the terminal into the off-season, the domestic policy on the short-term market boost is limited. Later, as the temperature rises, the flood season descends, site construction progress is again dragged down, steel mill start rate will continue to decline.
Weak spot support
Recent terminal demand is weak, the arrival of the southern flood season to accelerate the steel into the off-season market, traders hold high costs, manufacturers are not willing to stock. Inventory reduction is mainly the result of low profits of steel mills to take the initiative to depot and the lack of willingness to start work, coupled with overseas interest rate hikes are still expected, investors are not confident in terminal consumption, demand is hardly optimistic. The National Bureau of Statistics said that, in general, industrial enterprises to continue the recovery of benefits, but also to see, the international environment is severe and complex, the lack of demand constraints are obvious, the next stage, to focus on restoring and expanding demand, to further improve the level of production and marketing, and continue to boost the confidence of the main business, to promote the industrial economy continues to pick up for the better. According to experts expect that new credit will pick up in May, this year's broad credit tone is expected to remain until next year, and some housing enterprises last year, against the trend of land acquisition, Lujiazui, China Merchants Shekou and GREE Real Estate and other major asset restructuring matters, this move has a positive effect on the overall confidence of the industry and the repair of the valuation of housing enterprises, in the pace of this year's economic recovery, we have reason to believe that in June housing enterprises will push and promotional efforts will To release the pessimism brought by the first five months of sluggish transaction data, and the next property policy is still expected to continue to ease, June or enter the housing market rebound bottoming period.
Looking ahead, on the supply side, the consumption of finished products is still weak, and the downstream still has the will to suppress raw materials after the optimistic expectations are digested. On the spot side, coke profit contracted by tons, but coke enterprises started to adjust not much, the port collection sentiment is weak, tired storage is obvious, steel mills are not much willing to replenish storage. On the demand side, the latest data show that the national construction steel turnover fell back, steel mill profits limit the raw material upside, demand release is limited, and profits are at a relatively low level during the year, steel mills will continue to maintain low inventory running state. On the whole, the fundamentals in June can hardly be improved significantly, and the excess capacity of coke is yet to be digested, and the rebound in the market will depend on the actual policy implementation.
JIN DUN CHEMICAL has built a special (meth) acrylic monomer manufacturing base in ZHEJIANG province. This makes sure the stable supply of HEMA, HPMA, HEA, HPA, GMA with high level quality. Our special acrylate monomers are widely used for thermosetting acrylic resins, crosslinkable emulsion polymers, acrylate anaerobic adhesive, two-component acrylate adhesive, solvent acrylate adhesive, emulsion acrylate adhesive, paper finishing agent and painting acrylic resins in adhesive.We have also developed the new and special (meth) acrylic monomers and derivatives. Such as the fluorinated acrylate monomers, It can be widely used in coating leveling agent, paints, inks, photosensitive resins, optical materials, fiber treatment, modifier for plastic or rubber field. We are aiming to be the top supplier in the field of special acrylate monomers, to share our rich experience with better quality products and professional service.
