Coking coal price increases drive up silicon coal prices, but demand remains lukewarm [SMM Analysis]

Recently, coking coal prices have been raised multiple times, and under the influence of price linkage, the raw coal prices at silicon coal mines have also frequently increased. Following the rising costs, silicon coal prices in Ningxia have also been adjusted upwards.

The main reason for the price increase of silicon coal in Ningxia this time is the current rise in raw coal prices following coking coal prices, with a cumulative increase of 110 yuan/mt recently. Under the significant cost increase, various washing plants in Ningxia have had to raise silicon coal prices to avoid losses. Currently, the profit margins of washing plants are thin, but recent orders for silicon coal in Ningxia have weakened due to the expected production cuts by silicon enterprises in south-west China. After this price increase, demand is expected to remain weak.

The rising costs have pushed up silicon coal prices, weakening the price advantage of silicon coal in Ningxia. Recently, some in Sichuan have switched silicon coal channels to reduce production costs, abandoning Ningxia silicon coal in favor of Xinjiang non-caking silicon coal. According to the SMM survey, the transportation cost of Xinjiang non-caking silicon coal to silicon enterprises in Sichuan is about 600 yuan/mt. However, due to the high cost-performance ratio of Xinjiang non-caking silicon coal, even after adding transportation costs, the price per ton is still about 200 yuan cheaper than the delivered price of Ningxia silicon coal. Additionally, the sulfur content in raw coal at Ningxia mines has been relatively high recently. Considering all these factors, the demand outlook is not optimistic. This price increase is a reluctant move by washing plants to maintain costs.