Core Viewpoint: Supply side, coke producers maintained a relatively good profit level, with moderate sales performance and no inventory buildup pressure, sustaining normal production. Coke supply showed little change. Demand side, steel mills slightly increased their coke inventory, while higher pig iron production and stabilized coke prices brought their restocking willingness back to normal levels. Raw material side, recent coal mine safety production measures led to a decline in output, and the downside room for coking coal prices was limited. Overall, the fundamentals of coke are moving towards balance, with slightly stronger cost support, and the expectation of coke price cuts is minimal. The coke market may fluctuate next week.
Coke Spot Prices (yuan/mt):
This week, coke prices declined. Grade I metallurgical coke (dry quenching) was 1,955 yuan/mt; quasi-grade I metallurgical coke (dry quenching) was 1,815 yuan/mt; grade I metallurgical coke was 1,590 yuan/mt; quasi-grade I metallurgical coke was 1,508 yuan/mt.
This week, coke port trade outflows from warehouses remained stable. Grade I wet quenching coke was 1,720 yuan/mt, and quasi-grade I wet quenching coke was 1,620 yuan/mt.
Coke Futures Prices (yuan/mt):
This week, coke futures market strengthened slightly.
Subsequent macro policies are in a vacuum period, with limited impact on the coke futures market. However, downstream steel mills and traders have a slight restocking expectation, offsetting the off-season market. Coke futures may fluctuate next week.
Coking Profit (yuan/mt):
According to the SMM survey, this week, the profit per ton of coke was 118.2 yuan/mt, with weaker profitability for coke producers.
From a price perspective, this week, coke spot prices fell by 50-55 yuan/mt, negatively impacting coke producers' profit margins. From a cost perspective, prices of major coal types declined by 30-80 yuan/mt, with low-sulfur primary coking coal and other key coal types remaining basically stable at 1,400-1,600 yuan/mt, leading to lower coking costs.
Subsequently, coke prices are not expected to decline. Coupled with coal mine safety production measures, market sentiment for coking coal has shifted, and the downside room for coking costs is limited. Coke producers' profitability may fluctuate rangebound next week.
Coke Oven Capacity Utilisation Rate:
According to the SMM survey, this week, the coke oven capacity utilisation rate was 76.1%, up 0.1 percentage points WoW. In Shanxi, the rate was 77.3%, up 0.2 percentage points WoW.
From a profit perspective, this week, coke producers maintained a relatively good profit level, with high production enthusiasm. Even if profits decrease later, large-scale losses are unlikely, and overall production remains stable. From an inventory perspective, coke producers' coke inventory 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 producers in Shandong voluntarily reduced production, with limited impact on supply.
Subsequently, most coke producers are unlikely to expand losses and will remain profitable. Combined with no inventory buildup pressure, coke oven capacity utilisation rates may remain stable next week.
Coke Inventory Analysis:
This week, coke producers' coke inventory was 361,000 mt, up 2,000 mt (+0.6%) WoW. Steel mills' coke inventory was 2.983 million mt, up 27,000 mt (+0.9%) WoW. Coke producers' coking coal inventory was 3.134 million mt, up 54,000 mt (+1.8%) WoW. Port coke inventory was 1.21 million mt, up 5.2% (+60,000 mt) WoW.
This week, coke producers' operating rates showed little change, with stable coke supply. Downstream steel mills maintained high coke inventory levels, and their finished steel sales underperformed expectations, leading to cautious procurement strategies. Coke producers barely achieved a production-sales balance, with slight fluctuations in coke inventory. Subsequently, coke supply may remain stable, and steel mills are likely to maintain cautious procurement strategies. Coke producers' coke inventory may remain stable next week.
This week, coke prices declined, combined with stabilized finished steel prices, which increased steel mills' procurement enthusiasm. A few steel mills conducted slight restocking. Subsequently, coke spot prices are expected to remain stable, with some steel mills restocking. However, increased pig iron production will drive higher rigid demand for coke. Steel mills' coke inventory may slightly increase next week.
This week, coking coal prices declined, but coke producers' production remained stable, with low restocking willingness for coking coal. Only a few coke producers conducted restocking. Subsequently, coking coal prices are not expected to decline significantly, but most coke producers will maintain moderate restocking, primarily purchasing as needed. Coke producers' coking coal inventory may slightly increase next week.
This week, coke supply remained ample, but stabilized coke prices increased speculative enthusiasm among traders. Port inventory may slightly increase next week.
