Since July, negotiations between different segments of the coal and coke supply chain have intensified. In the coke market, sentiment has gradually weakened after previous rounds of price increases, with the 10th round of coke price hikes yet to be implemented and steel mills showing stronger resistance. In the coking coal market, although supply constraints caused by safety inspections continue to provide solid price support, slower downstream procurement and weaker market confidence have reduced upward momentum. Overall, the coal and coke markets are gradually shifting from a cost-driven phase toward a new stage of supply-demand rebalancing.
Coke Price Increase Faces Resistance
On July 7, market sentiment in the coke sector weakened noticeably. After coke producers successfully pushed through nine rounds of price increases, profitability improved, and some plants maintained normal operations or slightly increased production. Overall inventory pressure remained limited. However, as steel consumption entered the traditional seasonal low season, weak downstream demand began to weigh on the coke market, with signs of a looser supply-demand balance emerging.
Currently, most steel mills are resisting the 10th round of coke price increases, and market transactions have slowed. With steel mills holding relatively sufficient raw material inventories, the latest round of price hikes is unlikely to be implemented smoothly. In the short term, the coke market is expected to remain weak but stable.
On the supply side, coke producers remain relatively active in maintaining production. Some companies reported normal operating rates and stable sales, but profitability has already approached the breakeven level. Given persistently high coking coal costs, coke producers remain reluctant to cut prices significantly. However, inventories at some coke plants have started to accumulate, leading to price reductions in order to accelerate shipments.
On the demand side, hot metal production remains at relatively high levels, providing some support for coke consumption. However, continued hot and rainy weather in southern China has weakened end-user steel demand and increased pressure on finished steel sales. Meanwhile, rising raw material costs have further squeezed steel mill margins, prompting some blast furnaces to schedule maintenance. If steel production cuts expand, coke demand could face further downside pressure.
Coking Coal Supply Remains Tight, but Market Pressure Is Increasing
For coking coal, supply constraints remain a key market support factor. Safety inspections continue across major producing regions such as Shanxi, while some coal mines have been affected by accidents, safety risks and underground operating conditions, slowing the pace of production recovery.
However, despite limited mine supply preventing significant inventory accumulation, slower procurement from coke producers has reduced shipments from traders and coal companies. Market transactions have weakened, and downstream buyers have become increasingly cautious toward high-priced premium coking coal.
Price corrections have already emerged in some regions. Online auctions have also shown weaker performance. On July 7, a low-sulfur coking coal auction in Lüliang (A10.5, S0.8, V25, G85) started at RMB 1,820/t, with all cargoes sold at RMB 1,880–1,900/t, down RMB 10–25/t from the previous auction on June 30.
Imported Coking Coal Under Pressure as Price Advantage Weakens
The imported coking coal market remains weak overall. For Mongolian coal, futures prices have fluctuated lower, while traders have maintained relatively firm offers. However, downstream buyers have shown limited willingness to purchase at high prices, resulting in subdued transactions at border ports. Current offers for Mongolian 5 raw coal are around RMB 1,200/t.
Outlook: Coke to Remain Weak and Stable, While Coking Coal Consolidates at High Levels
Overall, the coal and coke markets are currently undergoing a transition in supply-demand dynamics.
Although tight coking coal supply continues to provide cost support, the seasonal slowdown in steel consumption, shrinking steel mill profitability and rising expectations for maintenance are gradually weakening coke demand. The implementation of the 10th round of coke price increases remains challenging, and coke prices could face downward pressure if steel production cuts expand.
Looking ahead, market attention will focus on the pace of coal mine production recovery, the scale of steel mill maintenance activities, and inventory changes at coke plants. For coking coal, supply constraints are expected to continue limiting downside risks in the near term, but weaker procurement and softer market sentiment may keep prices in a high-level consolidation range.
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