[SMM Analysis] Coke prices have fallen and coke enterprises' profits have shrunk, but the operating rate of coke enterprises remains stable

Last week, coke prices experienced a round of price cuts, and steel mills have already proposed a second round of reductions on August 2, which was expected to be implemented by August 5. The profit margins of coke enterprises have been compressed. Based on the two rounds of reductions (100-110 yuan/mt), after the two rounds of price cuts, most coke enterprises' profits will fall below the break-even point, with a slight loss of 0-50 yuan/mt.

However, considering the recent weakening of upstream coal prices, there is still room for a reduction in costs for coking enterprises. Therefore, the probability of a rapid expansion of losses for coking enterprises in the short term is not high. Additionally, with moderate demand from downstream steel mills, coking enterprises are shipping smoothly and have no inventory pressure on their own coke. As a result, it is expected that the probability of a sharp drop in the operating rate of coking enterprises in the short term is not high. The operating rate of coking enterprises will see a slight decline but will still remain at a relatively high level.