Wrestling between Steel Mills and Coking Companies Kicks Off

SHANGHAI, Jan 29 (SMM) - Coking coal market: Coal mines have resumed the operation one after another, which lifted the supply of coking coal. But the downstream demand is generally weak, and traders still stand on the sidelines. At present, the downstream buyers have restocking demand for a certain varieties of coals. Hence, there is a structural shortage of coking coal in the market, and the quotes from coal mines have been flat.

Coke market: On the supply side, most coke companies maintained normal production during the Chinese New Year (CNY) holiday, but some saw their coke inventories climb due to declining transportation capacity.  On the demand side, the delayed arrivals of coke caused the coke inventory of some steel mills to drop slightly. Generally, the steel mills mainly purchased coke on rigid demand, and some steel mills still forced down coke prices strongly to contain losses. 

To sum up, the supply of coking coal has not yet fully recovered, and the downside room for coking coal prices is limited, which means the cost support for coke prices is still holding. However, the coke inventory of most steel mills continues to be sufficient after the CNY holiday, so some steel mills have been tough on lowering purchase prices of coke amid the off-season. As the wrestling between steel mills and coking companies kicks off, the coke prices are expected to remain largely stable with limited decline.