[SMM Coal and Coke Analysis] Cost Support Slightly Strengthened, Coke Price Cut Is Relatively Unlikely

1. According to the SMM survey, coke profit per mt was 118.2 yuan/mt this week, with coke enterprises experiencing weaker profitability. From a price perspective, coke spot prices fell by 50-55 yuan/mt this week, negatively impacting the profit margins of coke enterprises. From a cost perspective, prices of major coal types declined by 30-80 yuan/mt this week, with low-sulfur primary coking coal and other key coal types remaining basically stable at 1,400-1,600 yuan/mt, leading to a decrease in coking costs.

Coke prices are not expected to decline further in the near term. Coupled with coal mines prioritizing safe production, market sentiment for coking coal has shifted, leaving limited downside room for coking costs. Coke enterprise profitability is expected to fluctuate rangebound next week.

2. According to the SMM survey, the coke oven capacity utilization rate was 76.1% this week, up 0.1 percentage points WoW. In Shanxi, the coke oven capacity utilization rate was 77.3%, up 0.2 percentage points WoW. From a profit perspective, coke profit per mt remained at a relatively good level this week, with coke enterprises maintaining high production enthusiasm. Even if profitability decreases in the future, large-scale losses are unlikely, and overall production remains stable. From an inventory perspective, coke inventories at coke enterprises fluctuated rangebound this week, with moderate sales performance and no significant inventory buildup pressure. From an environmental protection perspective, only Shandong strictly enforced environmental protection policies, but most coke enterprises in Shandong voluntarily reduced production, resulting in relatively small impacts on supply.

Most coke enterprises are not expected to see expanded losses and will remain profitable. Combined with no significant inventory buildup pressure, the coke oven capacity utilization rate is likely to remain stable next week.

3. On the supply side, coke enterprises maintained relatively good profitability and moderate sales performance, with no significant inventory buildup pressure, ensuring normal production and minimal changes in coke supply. On the demand side, steel mills saw a slight increase in their coke inventories. However, with rising pig iron production and stabilized coke prices, their willingness to restock coke returned to normal levels. On the raw material side, recent coal mine safety production measures led to a decline in output, leaving limited downside room for coking coal prices. In summary, the coke market fundamentals are moving toward balance, with slight cost support strengthening. The likelihood of coke price reductions remains low, and the coke market is expected to operate with fluctuations next week.