Sinopec Economics: Cost demand provides dual support, and coke prices still have an upward expectation

Recently, prices for the dual-coke futures and spot markets have risen strongly. On June 3, the fifth round of domestic coking coal price increases was implemented. Since April, prices have cumulatively increased by 250-275 yuan/ton, and there are still expectations of further increases within the week. Coke prices are holding a relatively strong trend, mainly driven by higher coking coal costs.

During June’s Safety Production Month, Shanxi’s coal mines that had been shut down are resuming production slowly. This has led to a noticeable contraction in coking coal supply, with pithead coal prices rising rapidly, and coke costs increasing significantly. Most coking plants are approaching loss levels, directly driving coke price increases.

Second, steel mills currently still have adequate profits. Blast furnaces are operating actively, and iron hot metal output remains at a high level. The strong “just-needed” demand for coke supports consumption, and most steel mills are purchasing actively.

In addition, as shortages in raw material supply become apparent and loss pressures emerge, coking plants increase their production cuts, and coke supply shows a contracting trend. With demand remaining steady, the supply and demand situation for coke continues to tighten.

In the short term, the tight supply of coking coal and high prices will persist. Coke price performance is being driven more strongly by costs. Under a relatively tight supply-demand relationship, coke prices may continue to trade on the stronger side. (Zhuochuang Information)