Zhang Qiusheng believes that the coke price in 2020 is relatively firm, but also look at environmental protection and de-capacity efforts. Under the strict environmental protection situation, coke production decreased slightly, steel mills under the high start of high quality coke demand increased, supply and demand showed a tight balance. At the same time, the coking de-capacity policy and efforts have been stepped up year by year, with ultra-low emissions and steel coking pushing capacity withdrawal and structural optimization. The mismatch between supply and demand is expected to be the core driver of coke strength. The coal market is expected to be balanced between supply and demand in 2020, with prices being mainly stable.
In terms of how to manage risk in the black industry chain in 2020, Cai Congzheng analyses that.
One is the risk of real estate investment declining due to the real estate market policy adjustment. Steel mills and steel traders with high inventories, can consider the appropriate basis for steel futures selling hedge. Rebar and hot coil futures can be sold as hedges based on the base spread.
Secondly, facing the risk of coke price increase due to the reform of the supply side of the coking industry, the industry chain can buy futures and options to preserve the value of the main coke contract according to the base difference situation, and steel mills can purchase on demand and choose the opportunity to buy the main coke contract.
Thirdly, the industry is facing the risk that supply exceeds demand, steel profits are squeezed. Industrial chain enterprises can reduce the spot inventory, pre-sell futures on their own steel production, reduce the purchase of spot raw fuel, virtual stock purchase of raw fuel futures, and choose far-month futures contracts for virtual steel mill lock-in operations.