SMM daily comment on domestic coking coal and coke market (Aug 23)

SHANGHAI, Aug 24 (SMM) –

Coking coal market:
Affected by safety accidents, the production of coking coal in some coal mines in Shanxi and Shaanxi was reduced. Coking coal and coke futures prices rose on Wednesday, among which coking coal price soared by more than 4%. As market sentiment improved, more buyers were willing to buy coking coal via online auctions. Coal mines were mainly delivering previous orders and their inventory increased. Downstream coke and steel enterprises tended to drive down prices because of low profit margins. Influenced by the above factors, the price of some coal types may be lowered.

Coke market:

In terms of fundamentals, coke production was temporarily stable. The high output of molten iron makes downstream purchases more active, and steel mills still have a rigid demand for coke. Therefore, there were more upstream shipments, and coke stocks remained low. Coke stocks at downstream steel mills are mostly moderate, so coke purchases are basically stable. Poor steel shipments and shrinking profits resulted in some steel mills intending to cut the coke price.

On the whole, the coke inventory of steel mills showed an increasing trend, but the output of molten iron remained high, supporting the demand for coke. Due to the recent frequent coal mine accidents in Shanxi, the supply of coking coal tightened again, so the pressure on coke costs is still high. Thus, many local coke companies didn’t accept price reductions. The short-term coke market may run weakly, and the stalemate between coke plants and steel mills will continue.