Core Viewpoint: Supply side, coke producers saw improved profitability and moderate sales performance, with relatively small inventory buildup pressure, maintaining normal production. Coke supply remained relatively stable. Demand side, steel mills slightly increased their coke inventory, coupled with a decline in pig iron production and the fifth round of coke price cuts, leading to low restocking willingness for coke. Raw material side, coke producers recently accumulated coking coal inventory but showed low restocking willingness, with coking coal prices still having downside room. In summary, the fundamentals of coke remained slightly loose, with weak cost support. The expectation of coke price cuts persists, and the coke market is likely to fluctuate downward next week.
Coke Spot Prices (yuan/mt):
This week, coke prices remained stable: Grade I Metallurgical Coke (Dry Quenching) at 2,010 yuan/mt; Quasi-Grade I Metallurgical Coke (Dry Quenching) at 1,870 yuan/mt; Grade I Metallurgical Coke at 1,640 yuan/mt; Quasi-Grade I Metallurgical Coke at 1,558 yuan/mt.
This week, coke port trade outflows from warehouses prices remained stable: Grade I Wet Quenching Coke at 1,720 yuan/mt; Quasi-Grade I Wet Quenching Coke at 1,620 yuan/mt.
Coke Futures Prices (yuan/mt):
This week, coke futures market first rose and then fell, with limited impact from favourable macro news.
Subsequent macro policies are in a vacuum period, with limited impact on the coke futures market. However, there is an expectation of a downward adjustment in coke spot prices, and the coke futures market is likely to fluctuate downward next week.
Coking Profit (yuan/mt):
According to the SMM survey, the average weekly profit per mt of coke was 112 yuan/mt this week, showing improved profitability for coke producers.
From a price perspective, coke spot prices remained stable this week, with no impact on the profit and loss per mt of coke for producers. From a cost perspective, prices of major coal types declined this week, with a decrease of 30-80 yuan/mt. Low-sulfur primary coking coal and other key coal types remained basically stable at 1,400-1,640 yuan/mt. Coking costs decreased, improving the profitability per mt of coke for producers.
Coke prices are still expected to decline. Even if coal mine transactions remain weak and coking coal prices have further downside room, losses are unlikely to be offset. Coke producers' profitability may narrow next week.
Coke Oven Capacity Utilisation Rate:
According to the SMM survey, the coke oven capacity utilisation rate was 76.0% this week, up 0.4 percentage points WoW. In Shanxi, the rate was 77.1%, up 0.5 percentage points WoW.
From a profit and loss perspective, profitability per mt of coke improved this week, maintaining high production enthusiasm among coke producers. Even with reduced profitability later, large-scale losses are unlikely, keeping overall production relatively stable. From an inventory perspective, coke inventory at coke producers slightly increased this week, but sales performance was moderate, with no significant inventory buildup pressure. From an environmental protection perspective, only Shandong strictly enforced environmental protection policies. However, most coke producers in Shandong voluntarily reduced production, with minimal impact on supply.
Subsequently, most coke producers are unlikely to see expanded losses and will remain profitable. Coupled with relatively small inventory buildup pressure, coke oven capacity utilisation rates are expected to remain stable next week.
Coke Inventory Analysis:
This week, coke inventory at coke producers was 359,000 mt, up 11,000 mt or 3.2% WoW. Coking coal inventory at coke producers was 3.08 million mt, up 38,000 mt or 1.2% WoW. Coke inventory at steel mills was 2.956 million mt, up 28,000 mt or 1.0% WoW. Coke inventory at ports was 1.15 million mt, down 0.7% or 10,000 mt WoW.
This week, coke producers slightly increased their operating rates, leading to a simultaneous increase in coke supply. However, downstream steel mills held relatively high coke inventories, and sales performance fell short of expectations. Coke producers barely achieved a production-sales balance, with slight fluctuations in coke inventory. Subsequently, coke supply is expected to remain stable, while steel mills maintain a cautious sentiment. Coke inventory at coke producers may slightly increase next week.
This week, coking coal prices declined, but coke producers showed average production performance and low restocking willingness for coking coal, resulting in minimal changes in coking coal inventory. Subsequently, coking coal prices are still expected to decline. However, most coke producers exhibit average restocking willingness for coking coal, and coking coal inventory at coke producers may slightly increase next week.
This week, coke prices remained stable, but some steel mills have already issued letters for the fifth round of coke price cuts. Coupled with weaker-than-expected terminal production performance, steel mills showed low procurement enthusiasm and maintained a wait-and-see attitude. Subsequently, coke spot prices are expected to decline, combined with a decrease in pig iron production at steel mills, leading to reduced coke sales. Coke inventory at steel mills may slightly increase next week.
This week, coke supply remained loose, with a clear bearish sentiment in the market. Coke is likely to face the fifth round of price cuts, and speculative enthusiasm among traders was low. Coke inventory at ports may slightly decrease next week.
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