Coal and coke steel market may face "warm winter"

At present, China's steel and coking capacity replacement projects into a centralized production cycle. With the deepening of the air pollution prevention and control work, how to accurately grasp the market situation of coal and coking steel, make rational use of futures tools for risk management, actively explore a new mode of upstream and downstream production and operation and cooperation, become the topic that the personage inside course of study pays close attention to commonly. On October 22, the 2020 China Coal and Coke Industry Conference was held in Shenzhen, co-hosted by the Dalian Commodity Exchange, the China Coal Industry Association and the China Coking Industry Association, and hosted by the Steel House website. The fourth quarter of steel prices will shock strong "black" varieties, this winter to early next year should be a very good time. It is expected that by the end of November or the end of this year, there will be a phased market in the 'black series' market, said Wu Wenzhang, founder and general manager of Steel House. According to Wu's article, China's iron and steel industry has a strong demand for raw materials, and the overall supply situation of the coke market is tight throughout the year due to the impact of environmental protection, elimination of backward production capacity, and related policies such as using coal to determine production and steel to determine coke production, coking coal market supply situation from relatively loose to a basic balance. In the first half of this year, due to the staged stagnation of domestic scrap steel supply, major iron ore supplier countries such as Brazil were affected by the new crown pneumonia epidemic. The domestic iron ore market remained tight, and port stocks dropped significantly, at present, overseas iron ore supply has resumed, international steel production capacity is recovering, China's steel industry is facing the winter demand for raw materials and winter storage of iron ore and other issues, iron ore market is going through the process of supply and demand rebalancing. "Black Series" varieties in the fourth quarter can be expected. For Steel Price Trend, Anshan Iron and Steel Co. , Ltd. . Raw fuel purchasing center general manager Liu Huatao estimated that the fourth quarter steel price strong shocks. He pointed out that from the demand point of view, the current macro-economy is further positive, the overall improvement of liquidity, domestic manufacturing demand continued to maintain a good momentum. By the end of the year, the construction industry is expected to further enhance the strength of demand, coupled with the marginal improvement in overseas exports, overall demand remains at a high level. From the supply point of view, by environmental protection, import reduction and other factors, sales pressure will be eased, conducive to falling steel inventory high. Regarding the coke, Wang Hanshuang, general manager of the Coke Division of the marketing head office of Xuyang Group Co. , Ltd. , believes that the ratio between the Capacity utilization and the coking Capacity utilization has obviously expanded at this stage, this shows that coke demand growth faster than supply growth, coke supply and demand will continue to shift to the tight state. "Coke prices are expected to be volatile and strong in the fourth quarter, with the possibility of a record high for the whole year in the fourth quarter, " said Wang Jinsuo, vice general manager of Chinalco Inner Mongolia International Trade Co. , inner Mongolia coking coal ("Mongolian coal" for short) can hardly fill the demand gap caused by the limited import of Australian coal ("Australian coal" for short) , but it will ease the pressure on the supply of coking coal in some regions, the price of Mongolian coal and domestic coking coal will be boosted by the import of Australian coal, especially the price of Shanxi big coal mine. "Australian coal is the main supplier of large-scale steel mills along the coast, and these steel mills are mainly purchasing large mine directors association. The price of the Long Association of Coking Coal Mine has been running low this year. Near the end of the year, the big coal mine will fix the price of the Long Association of Coking Coal Next year, and will certainly take the opportunity to raise the price of the long association of Coking Coal."Wang Jinsuo said. High enthusiasm for enterprise participation, the market is generally expected to coke steel market in the fourth quarter will usher in a "warm winter. ". For the enterprises of coal coking steel industry chain, any price fluctuation will have an impact on production and operation. At the time when the integration of Industry and Finance has become the consensus of the industry, the demand for enterprises to use financial instruments such as futures to carry out risk management continues to increase. "There are close to 2M active customers in China's futures market, and the number of institutional customers, including industrial customers, has reached 60 per cent, which shows that industrial customers are very active in the market. At present, there are more than 80 futures including futures and options in the futures market, which provides convenient conditions for enterprises to use futures tools to avoid risks and improve operational efficiency,"said Yang Qing, general manager of Galaxy Futures. Wang Shumei, director of the Industrial Products Division of Da Shang Institute, said that in the first nine months of this year coke and coking coal accounted for 44% and 55% respectively of the positions held by corporate customers, a significant increase compared with the same period last year, and the market structure continued to improve. From the overall transaction point of view, in the wind control supervision is not relaxed under the premise of the past two years, coke, coke futures liquidity has improved. Since the beginning of this year, although the overall volume of trading positions decreased slightly in the first half of the year, with the frequent occurrence of policies such as the normalization of epidemic prevention and control and the reduction of production capacity by coking, the activity of trading in the market has increased, the volume of coke and coking coal futures increased by about 38% and 59% respectively in September. Delivery, coke, coke coal delivery business remained smooth and smooth. As of 2009,23,660 units of coke futures had been delivered, equivalent to 2.366 million tons of spot goods, while 46,600 units of coking coal had been delivered, equivalent to 2.796 million tons of spot goods. "The futures market is a standardized market, the core is to provide forward prices for the industry, and companies use futures price signals to guide operations and hedge risks. The effectiveness of the futures price is a prerequisite for the futures function,"she said, citing, in the coke market, the formation of the new coke port distribution area and the corresponding price system are improving day by day, pushing the current price correlation of coke period to further increase to 0.82 in 2019. The emergence of new derivatives "requires a shift in corporate risk management from a single use of futures instruments to a comprehensive use of derivatives instruments, " Yang said, "from the perspective of the development of the global derivatives market, after the development of the OTC market to a certain extent, the size of OTC derivatives will gradually grow, and the overall trading volume will even far exceed that of the OTC market, " Yang said, the emerging derivatives instruments can be classified into three categories: basis trade presales and spot prices, over-the-counter options, and weighted trade. The advantages of these new tools are mainly reflected in four aspects: First, a high degree of spot customization, in the use of basic trade, weighted trade and other tools, spot end can be customized according to customer needs, specific to different regions, brands, quality, specifications, delivery cycle, etc. , close to the actual needs of customers. Second, it is more fault-tolerant and can realize non-linear profit and loss. The over-the-counter option and the option trade contain the profit and loss of the option, and the option strategy is more fault-tolerant. Thirdly, there are many strategies combination, high flexibility, relatively single function of the futures instrument, only two-way hedging can be carried out, option tool strategy is more abundant. Fourth, the settlement can be realized in the current accounting period, including the right to trade futures profit and loss can be included in the spot trade settlement, to solve the enterprise to participate in futures restrictions, the current merger assessment and other stubborn diseases.