Coke Prices Enjoy Stronger Cost Support

SHANGHAI, Dec 13 (SMM) - Coking coal market: As relaxed pandemic control measures boosted the purchasing enthusiasm of downstream enterprises, the inventory of coking coal in coal mines all declined. At the same time, some coal mines already completed their annual production targets, so they started to cut the production. As a result, the overall coking coal output declined, fuelling the prices of certain coal varieties.

Coke market: On the supply side, the coking companies have restored some profits. Meanwhile, the transportation situation gradually improved after the pandemic control policies were optimised, which promoted some coking companies to ramp up the production. However, the operating rates did not improve significantly due to tight supply of coking coal. So far, the coking enterprises were active in making shipments, and the coal inventory showed a downward trend. On the demand side, as multiple favourable macro policies boosted the market, the steel prices strengthened. Therefore, steel mills, who recovered some profits, were enthusiastic for production and thus purchased a large amount of coke.

On the whole, the steel mills had high demand for coke, but some coking companies were not motivated to increase the production. As a result, the coke inventory is running at a low level, leading to tight coke supply. It is expected that the short-term coke prices may continue rising with strong cost support.