SunSirs: Mine Accidents Trigger Tightened Safety Inspections; Spot Market Dynamics for Coking Coal and Coke Shift

Last week, a safety accident occurred at a coal mine in the Shanxi region, immediately triggering an industry-wide escalation in safety production inspections. Coinciding with the approach of "Safety Production Month," regional safety regulatory enforcement was abruptly intensified. Measures involving production halts, reductions, and restrictions were successively implemented at mines in major production hubs. This directly reversed the previously loose supply landscape for coking coal, driving a shift in the spot markets for both coking coal and coke—from weakness to strength—over the past two days, while market expectations underwent a rapid recovery.

I. Impact of Safety Inspections and Production Cut Policies

Following the accident, Shanxi—the nation's core coking coal production hub—swiftly launched a comprehensive safety rectification campaign. Non-compliant mines were ordered to suspend production, while operating mines tightened their mining pace, resulting in a marked decline in regional output of washed coal. At the industry level, safety patrols were simultaneously reinforced; mines across various regions voluntarily lowered their capacity utilization rates, leading to a short-term month-on-month decline in the average daily output of both raw and washed coal. Strict safety regulation has emerged as the most critical variable in the current market, disrupting the previous landscape characterized by high operating rates and abundant supply, and dampening market expectations regarding the release of incremental coking coal supply in the near future.

II. Spot Market Trends Over the Past Two Days

Over the past two days, domestic spot prices for coking coal have followed a trajectory of initial decline followed by a rebound. Previously, prices had trended lower due to high inventory levels and loose supply conditions; however, buoyed by expectations of production cuts driven by safety inspections, quotes for both primary coking coal and blending coal stabilized after halting their decline, with prices for certain high-quality, low-sulfur coal varieties seeing tentative upward adjustments. The spot market for coke moved in tandem. Although the pace of implementing the fourth round of price hikes has slowed somewhat, market sentiment favoring price support has strengthened; coke producers are experiencing smooth shipments, and the availability of low-priced inventory has diminished. On the demand side, blast furnace operating rates remain at high levels, and hot metal output is recovering steadily, providing solid fundamental support for the demand for both coke and coking coal. Downstream purchasing activity is currently focused primarily on restocking to meet immediate operational needs, and market participants' wait-and-see sentiment has notably eased.

III. April Import and Export Data

Customs statistics indicate that in April 2026, the total volume of coking coal imports reached 11.3 million tons—a substantial year-on-year increase of 27.07%, albeit a slight month-on-month decline of 9.04%. Of this total, 7.71 million tons were imported from Mongolia—accounting for nearly 70% of the volume—marking a significant year-on-year increase. Imports from Russia totaled 2.68 million tons, representing a slight year-on-year rise. In April, coke exports reached 760,000 tons, up 38.8% year-on-year; cumulative exports from January through April totaled 2.71 million tons. This overseas demand absorbed a modest portion of domestic supply, keeping import volumes at a low level. Overall, imported coking coal serves to supplement domestic supply and helps offset some of the production fluctuations occurring in major coal-producing regions.

IV. SunSirs Benchmark Prices (May 24)

As of May 24, the SunSirs benchmark price for coking coal stood at 1,558.75 RMB/ton, having risen cumulatively by 2.80% during the month. The benchmark price for coke reached 1,677.50 RMB/ton, recording a monthly increase of 7.53%. Both coking coal and coke benchmark prices are currently situated within the medium-to-high range for the year, reflecting a steady upward shift in the center of gravity for spot market prices.

V. Inventory and Upstream/Downstream Status

Currently, inventory levels across the entire supply chain remain generally high; steel mills and coking plants continue to accumulate coking coal stocks, while independent coking enterprises are slowly drawing down their coke inventories. In the upstream sector, coal mines have slowed their shipment pace due to safety inspections, leading to a gradual tightening of available supply in the circulation market. In the downstream sector, end-user demand for steel remains stable, and while steel mill profitability has fluctuated slightly, blast furnace production remains at high levels, ensuring that rigid demand for raw materials persists. Sales of downstream products remain steady, exhibiting neither a distinct weakening trend nor a sudden surge; operations are primarily characterized by demand-driven consumption and low-inventory management strategies.

VI. Market Outlook and Forecast

In the short term, the production-cutting effects stemming from safety inspections in Shanxi province continue to unfold, fueling expectations of tightening coking coal supplies. Consequently, spot prices have established a foundation for a rebound, signaling a shift away from recent weakness toward a volatile-but-firm upward trend. Coke prices are expected to follow suit, bolstered by strengthening cost-side support. Although high inventory levels continue to exert some downward pressure, the combination of rigid demand providing a price floor and the pass-through effect of rising raw material costs suggests that spot coke prices will be more prone to rising than falling. In the medium term, as safety inspections become a routine practice and coal mine operations gradually resume, a loose supply environment is expected to re-emerge. Consequently, the upside potential for coking coal and coke prices is limited; the market is expected to remain broadly volatile, with price trends tracking the implementation pace of safety regulations, blast furnace operating rates, and the rate of inventory destocking.

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