SMM daily comment on domestic coking coal and coke market (Aug 22)

SHANGHAI, Aug 22 (SMM) –

Coking coal market:

The recent frequent safety accidents in some areas of Shanxi have led to stricter local safety inspections, causing some coal mines to stop production and the output of coking coal to decrease accordingly. Since the purchasing pace of downstream enterprises and traders slowed down, coal mine shipments were not good, and coal inventories in some mines accumulated. Online auctions for most coal types failed and some coal prices lowered, leading to the muted market sentiment.

Coke market:

In the fundamentals, coke production increased and shipments were active. Hence, the inventory pressure of coke plants is small. Since traders were also active in shipping, coke shipments of coke plants have slowed in some regions. The output of molten iron at steel mills is high, supporting the rigid demand for coke. However, steel prices have weakened and profits shrunk, so the buyers mainly purchased coke on demand.

Overall, the rigid demand of steel mills for coke still exists, but traders’ active shipments have eased the supply tightness. Meanwhile, the end demand for steel didn’t improve significantly. Steel mill profits shrunk and the willingness to reduce coke prices is strong, so the short-term coke market may face a downside risk. The first round of coke price reductions may be implemented in the near future.