October 30th report:
I. Price Trends
According to the commodity market analysis system: In October, the overall spot market for metallurgical coke in China first declined and then stabilized. Over the entire month, there were two rounds of price reductions, with wet quenched coke prices cumulatively decreasing by 200 CNY per ton and dry quenched coke prices cumulatively decreasing by 220 CNY per ton. The price center clearly shifted downward. At the beginning of the month, the weak expectations from late September continued. After the first round of price reductions was implemented, market transactions remained cautious. In the middle of the month, the second round of price reductions was implemented. Coke producers attempted to raise prices by 50-55 CNY per ton, but steel mills, with weak profitability in finished products, strongly resisted the price increase. The proposed price hike did not materialize and remained only at the quotation stage.
2. Market Analysis
Spot Market: At the end of October, the market entered a stalemate, with prices stabilizing after falling. Regional price differences became more pronounced, with the mainstream negotiation price for premium dry quenched coke in Tangshan, North China, at 2,340 CNY/ton, and for quasi-premium dry quenched coke in Shanxi at 2,140 CNY/ton. The ex-port price for quasi-premium wet quenched coke was 1,890 CNY/ton. Overall, market sentiment was cautious, and traders were reluctant to take initiative, mostly following orders from steel mills. The core logic for the month shifted from cost-driven to negative feedback from downstream finished products, intensifying the bargaining between steel mills and coke producers. Coke producers' bargaining power weakened, leading to a gradual accumulation of inventory and increased pressure to sell.
Operating Rate Side: In October, the capacity utilization rate of independent coking plants saw a slight decline, with the sample of independent coking enterprises averaging 71.36%—down 0.48 percentage points from September. Daily coke production edged down to 612,900 tons. During the first half of the month, coking firms enjoyed reasonably healthy margins, kept their units running at relatively high loads, and avoided large-scale, concentrated maintenance, maintaining decent production enthusiasm. In the middle and latter part of the month, after two rounds of price cuts for coke were implemented, coupled with rigid costs for coking coal, per-ton coke profits rapidly contracted to just RMB 1 per ton. Some enterprises using higher-priced raw materials fell into losses, leading to reduced production willingness; a few proactively lowered operating loads and scheduled minor maintenance, causing overall operating rates to gradually ease. Meanwhile, integrated steel mills’ captive coking facilities operated relatively stably, with little overall fluctuation in output. On the inventory front, as downstream steel mills scaled back purchases, coking plant inventories continued to build up, while steel mills maintained low‑stock strategies, keeping coke‑available days at low levels and refraining from large‑scale advance stocking. Overall, the market is characterized by accumulating coking‑plant inventories and low stock levels at steel mills.
Profit: After five rounds of price increases, the average profit per ton of coke in China has risen to about 55 CNY/ton. Some coke enterprises in Shanxi and Hebei provinces have exceeded 100 yuan, but some samples still show an average loss of 127 CNY per ton of coke nationwide, indicating a significant divergence in regional and plant conditions.
Downstream Demand: Pig Iron: The average daily pig iron output of 247 sampled steel mills nationwide has declined from 2.35 million tons to around 2.33 million tons, while blast furnace operating rates have edged lower. Steel mills continue to operate at a loss, prompting them to schedule blast furnace maintenance and reduce smelting loads. Consequently, the marginal consumption of coking coal for basic demand has contracted. With temperatures in northern regions gradually falling, outdoor civil‑construction activities are constrained, new real‑estate starts remain weak, and the pace of physical infrastructure work has lagged behind expectations. As a result, construction‑steel transactions have been subdued, inventory drawdowns have been slow, and steel mills have proactively curtailed production to support prices. Although there is some structural demand for sheet products, its scale is limited and insufficient to offset the weakness in construction‑steel demand.
Procurement Strategy: Steel mills are maintaining low inventory levels and adopting a just-in-time purchasing approach, rigorously controlling raw material costs. There is limited willingness to engage in concentrated restocking, with incoming shipments primarily fulfilling essential, immediate‑demand orders. Acceptance of proposed coking coal price hikes remains subdued, prompting continued downward pressure on prices. Meanwhile, other downstream sectors—such as calcium carbide and foundry—account for a relatively small share of overall demand, which remains stable and provides only limited support to the broader coking coal market.
Upstream Demand: The core upstream raw materials for coke are coking coal, including prime coking coal and fat coal. Cost factors have served as a key support level this month. In China’s major producing regions of Shanxi and Shaanxi, routine safety‑production oversight remains in place, and high‑quality, low‑sulfur prime coking coal continues to face structural supply tightness. Meanwhile, customs clearance volumes at Mongolian coal ports have remained stable, with imported supplies steadily replenishing the market. Overall, coking coal supply has eased, leading to a volatile yet generally weaker price trend within the month, with prices edging lower. In the first half of the month, coking coal prices stayed elevated, keeping furnace‑entry costs high and providing strong cost‑based support for coke. By the middle and latter part of the month, auction prices for coking coal declined, weakening cost‑based support and creating room for steel mills to push for lower prices. However, the scarcity of premium prime coking coal limits the scope for deeper price drops, keeping the floor on production costs firm and constraining any sharp declines in coke prices. At the same time, overall coal‑energy prices remain broadly stable, with little likelihood of a substantial downward move, thereby establishing a rigid cost‑driven floor.
III. Future Market Outlook
Coking coal analysts believe that, taking into account supply and demand, costs, and seasonal factors, the coking coal market in November will likely remain weakly volatile—softening first before stabilizing—and is unlikely to see a sustained sharp rally. The ongoing tug-of-war between steelmakers and coking coal producers will continue to be the dominant theme.
Bearish factors: 1. Seasonal demand is weakening, with further cooling in the north, construction activities continue to be restricted, and the demand for finished steel products is under pressure. The scope of blast furnace maintenance at steel mills may continue to expand, and there is still an expectation of a decline in pig iron production. As a result, the demand for coke is expected to continue to contract. 2. Coke producers currently have high inventory levels, and there is pressure to reduce stock. Without a significant recovery in demand, coke producers will continue to face pressure to sell their products, making it difficult for prices to rise.
Bullish Support: 1. The price of upstream coking coal in China has limited room for further decline, and the cost floor means that coke prices are unlikely to fall significantly. Coking companies are currently operating at low profit margins or even at a loss. If prices continue to fall, coking companies will likely implement more production limits and maintenance, reducing coke supply and alleviating supply and demand pressures. 2. As the end of the year approaches, there may be periodic restocking, leading to a short-term surge in demand.
Overall prediction: In November, the spot price of coke in China will mainly show a weak and fluctuating trend with bottom-level competition. There is still a short-term risk of a slight decline, but it is expected to gradually stabilize after the fall. The main dry quenching coke prices are expected to operate within the range of 2050-2300 CNY/ton. Key factors to monitor include the pig iron production of steel mills, blast furnace maintenance plans, the auction prices of primary coking coal, the implementation of coke production limits, and changes in finished product transactions.
