[SMM Analysis] As coking enterprises' profits turned positive and steel consumption entered off-season, coking coke supply and demand contradictions may gradually widen

Last week, with the implementation of the first round of coke price increases, the profits of coking enterprises returned to the break-even point. Coking enterprises in Shandong were generally profitable, and the profits of coking enterprises in Shanxi have also returned to the break-even point.

With the improvement in coking enterprises' profits, their overall production enthusiasm is high, and the supply of coke remains stable at a high level.

Demand side, in the off-season for steel consumption, steel mill profits are being squeezed, and the growth rate of pig iron production is gradually slowing down. Consequently, the growth rate of coke demand may slow down. Additionally, the coke inventory of coking enterprises has been increasing for two consecutive weeks, indicating a trend of gradually expanding supply-demand contradictions.

Considering that coke inventories at coking plants and steel mills are still relatively low, the accumulation of short-term contradictions in the fundamentals has limited impact on the market. However, in the long run, as pig iron production at steel mills is about to peak and coke supply remains high, the supply-demand contradiction in coke fundamentals will bring some downward pressure on coke prices in the future.