China
Steel Industry Summit for 2020 Market hosted by SteelHome, was successfully held in Xiaoshan
District, Hangzhou City, Zhejiang Province, during November 1-3, 2019.
This summit was jointly held by Maanshan Steel Company, Ouyeel Co., Ltd
and Youfa Pipe Group. Co-hosts were Shanghai Futures Exchange, Dalian
Commodity Exchange, Xiamen C&D, China Minmetals Corporation, GTXsteel
E-commerce and Henan Gang Duo Industrial. Over 1000 delegates from
governments, associations, steel mills, miners, traders, research
institutes and media attended the event.
Ms. Guo Lijuan, Deputy Chief Economist of Shanxi Coking Coal Group Co., Ltd, delivered a keynote speech
titled Basic Perspective on Current
Coking Coal Market
Here is summary of her speech:
I Views
on 2019 coking coal market
1) Coking
coal long-term contract cooperation has maintained stability for a long
time.
From January to October
2019, the contract fulfillment rate of China's coking coal enterprises and
long-term contract customers showed a high level stable trend. It shows
that the cooperation between long-term contract customers and coking coal
enterprises remains stable, all parties are focusing on long-term
cooperation, sharing economic prosperity and coping with market changes,
long-term contract system has the effect of smoothing market fluctuations,
maintaining price stability and promoting sustainable development.
2) Low
fulfillment rate of long-term cooperative contracts in October of recent
two years.
From the perspective of
October in the past two years, the sudden drop in the fulfillment rate of
long-term cooperative contracts has affected the production and
organization of Chinese coking coal enterprises in October of these two
years.
3) Dynamic
exit and entry mechanism of long-term cooperative customers started.
China's coking coal
long-term contract system has been in stable operation for three years and
has gradually become a recognized system in all aspects.
Starting the dynamic
exit and entry mechanism of long-term cooperative customers is conducive
to ensuring the vitality, effectiveness and sustainability of long-term
cooperative system.
4) The
monthly import volume of coking coal is negatively related to the
fulfillment rate of long-term contract, and it is positively related to
the inventory of the whole industrial chain of coking coal.
From January to
September 2019, China imported 60.95 million tons of coking coal, a
year-on-year increase of 19.9%, with an average monthly import volume of
6.7722 million tons, the highest since 2013. In August 2019, China
imported more than 9 million tons of coking coal, and in September, nearly
8 million tons of coking coal.
In the middle of
September 2019, coking coal inventory in the whole industrial chain of
Shanxi Coking Coal Group reached a stage high point, but the contract
fulfillment rate in October kept at a low level of the whole year.
5) Since
the implementation of coking coal long-term contract system in China, with
stable price performance, it has led the international coking coal price
to converge to the long-term contract price in China.
Since the signing of the
medium and long-term contract price in November 2016, it has been stable
for more than 35 months. In the past 35 months, the price of medium and
long-term coking coal in China has been at a stable level, which has
become an important support and strong guarantee for the stability of
steel price. China coking coal long-term contract system has played
a stabilizing role in global coking coal and will continue to play this
role.
II Favorable
factors of later coking coal market
1. China’s first
centenary goal plan is in the decisive and final stage. We are confident
in China's economy and will make contributions to building a moderately
prosperous society in an all-round way with the achievements of stable
development of coal, coke and steel.
2. China's economy has
shown good resilience and stability in the world, attracting more and more
enterprises to pay attention to and favor China.
3. The output of pig
iron remains at a high level as a whole, the iron coke ratio is at a
reasonable level, long process steelmaking is more economical, and the
demand for coking coal will remain stable for a long time.
4. With the upgrading of
coking industry, the utilization rate of production capacity will be
significantly improved. Therefore, the use of coking coal will increase,
and the demand of large-scale coke oven for high viscosity coal will
increase.
5. In 2019, the import
volume of coking coal increases significantly and the impact on the
domestic market balance has attracted attention and thinking from all
aspects.
6. It is an important
content of building a well-off society in an all-round way to solve the
practical problems of safety and environmental protection of coal, coke
and steel, and realize the yearning of employees in the whole industrial
chain for a better life.
III
Constraints of later coking coal market
1. Due to environmental
protection, short-term production restriction policy will be implemented
for iron and steel and coking enterprises.
2. The overall supply
and demand of coking coal market in China has entered a stable period, and
the imported coal and domestic coal are in a state of complete
competition. The large increase of imported coal will inevitably result in
the reduction of domestic coal, the reduction of capacity utilization
ratio and the disturbance to the production and operation order of
domestic coking coal enterprises.
3. Accelerating the
elimination of backward and excess capacity will have a phased impact on
demand.
IV
Factors affecting coke price
1. Favorable factors:
elimination of backward production capacity and shutdown of small coke
ovens that fail to meet the environmental protection standards; reduction
of coke production capacity in Hebei, Shandong, Jiangsu and other major
coke producing areas.
2. Constraints: it will
take some time to solve the problem of low concentration of coke industry.
The international demand for coke has been gradually weakened.
V Outlook
In
2020, China's coking coal market will present the characteristics of
overall stability and orderly operation. The real characteristics of
coking coal quality in China will be further revealed by the market, and
its value will continue to increase.
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