[SMM Analysis]Expectations Game under Cost Squeeze – September Outlook for Coking Coal, Coke, and Iron Ore

Looking ahead to September, the coke market is expected to hold up well in the first two-thirds of the month, with 2-3 rounds of price increases likely to be implemented. However, as the market evolves, prices may stabilize in the latter part of the month. At present, safety supervision and control at main producing mines remain strict, and the growth in Mongolian coal imports is limited. Coking coal supply continues to tighten, and prices are rising at high levels. Coking production costs have risen significantly, and coke producers are under prominent loss pressure. Coke price increases have strong cost support. Meanwhile, restocking demand before the National Day holiday is gradually being released in the middle and latter parts of the month, providing a phased boost to coke procurement demand. However, the peak-season performance of finished steel has fallen short of expectations, steel mill profit recovery remains weak, and the loss-making scope has expanded again. There is pressure for blast furnace maintenance to expand further in the later period, and coke rigid demand is gradually weakening, constraining upside room. Moreover, coke price increases will exacerbate steel mill losses and force maintenance, gradually bringing the market into a balanced pattern of cost support versus weakening demand.
September: Iron ore prices are expected to consolidate on a strong note. Bullish factors: 1. End-use demand enters the peak season, hot metal production grows, and pre-holiday stockpiling drives demand growth. 2. BHP worker strike negotiations and mainstream mine long-term contract negotiations are still underway, and news-driven disruptions may intermittently flare up, providing sentiment-based support to prices. Bearish factors: 3. Mines push for target at quarter-end, and supply rebounds. 4. Expectations for US Fed interest rate hikes lean hawkish, limiting the rebound room for ore prices.