On January 6, several steel mills in Tangshan, Tianjin, and other regions of China proposed the sixth round of coke price cuts, expected to be fully implemented by the 8th. As the end of the year approaches, demand weakens as steel mills show reduced production enthusiasm, increase blast furnace maintenance, and lower daily hot metal output. Consequently, steel mills' willingness to compress coke profits rises, resulting in a narrow decline in the finished steel market and a resurgence of negative feedback scenarios.
On the raw material side, coal mines face stricter safety production requirements, leading to more holiday plans after New Year's Day and generally low production sentiment. Supply from coking plants remains stable with good overall shipments, although some coke enterprises are reducing production due to environmental factors. With continued cost-concessions on raw materials, the coke market's cost support weakens, posing a further downward risk. Future attention needs to be given to changes in hot metal output and the impact of coal mine holiday plans on supply before the festival.
The Domestic Coking Coal Market Under Pressure
On January 6, the domestic coking coal market appeared weak. Although there is an expectation of production cuts on the supply side, downstream purchase willingness remains low. Social inventory is high, the recovery of coal pass-through and the winter stockpiling demand is lower than expected, resulting in weak willingness to restock downstream, contributing to a softening coal price trend in the short term.
Specific Price Dynamics:
- In the Jinzhong market, coking coal prices dropped by 10 yuan/ton, with the ex-factory price of medium-sulfur main coking refined coal at 1,290 yuan/ton (cash including tax).
- The Linfen Yaodu District market saw a decrease of 30 yuan/ton in coking coal prices, with the ex-factory price of high-sulfur strong fat coal at 1,020 yuan/ton (cash including tax).
- In the Heze market, coking coal prices fell across the board: gas coal down by 50 yuan/ton to 1,240 yuan/ton, 1/3 coking coal down by 70 yuan/ton to 1,330-1,360 yuan/ton, and fat coal down by 90 yuan/ton to 1,600 yuan/ton, all ex-factory prices cash including tax.
Intensified Market Challenges from Mongolian Coal Bidding Failures
On January 6, Mongolia's ER company conducted an online auction for Mongolian 3# refined coal, starting at 950 yuan/ton (excluding tax), a decrease of 50 yuan/ton from the last session on January 3. However, the entire listed quantity of 12,800 tons was unsold, marking the 36th consecutive bidding failure. The supply location is China’s Ganqimaodu port, with a supply date until April 6, 2025.
Overall, continuous declines in coke prices are suppressing the performance of the coking coal market. The short-term scenario of weak supply and demand is expected to continue, potentially putting further pressure on prices.
