SunSirs: China Domestic Coking Coal Supply Tightens Significantly in Early June; Price Levels Shift Upward

As June began, supply within the domestic coking coal market tightened noticeably, and the overall price level shifted significantly upward. According to data from the SunSirs monitoring system, as of June 3, the SunSirs Coking Coal Price Index stood at 1,712.5 RMB per ton—a 4.9% increase compared to the start of the month.

Supply Side: In early June, in the wake of a major gas explosion accident in Qinyuan, safety inspections across all coal mines in Shanxi Province were intensified, leading to a significant tightening of supply. The designation of June as "National Safety Production Month"—combined with comprehensive, blanket-style inspections at production sites—resulted in the suspension of operations at 25 coal mines in Qinyuan; these safety inspections are expected to continue until the end of July. Consequently, Shanxi's coking coal supply is projected to decrease by 10%–15% (approximately 90,000 tons per day) over the next one to two months. Although imports of Mongolian coal have provided some supplementation, high inventory levels at ports have constrained their distribution, preventing them from fully offsetting the supply deficit. Overall, domestic coking coal supply remains tight; specifically, high-quality, low-sulfur primary coking coal resources are in short supply, leading coal mines to hold back sales in an effort to prop up prices.

Downstream Side: Downstream demand is characterized by a combination of "rigid support" and "inventory replenishment." Steel mill production remains robust, with average daily hot metal output rising to 2.41 million tons and blast furnace utilization rates reaching 84.14%; this provides strong, rigid support for the demand for metallurgical coke. The fifth round of proposed price hikes for metallurgical coke has partially taken effect in certain regions, allowing coke producers to restore their profit margins. This recovery has, in turn, driven an uptick in operating loads at coke plants and led to a marked increase in their procurement of raw coking coal.

SunSirs Coking Coal Analyst's View: Coking coal prices are expected to trend further upward in the short term. On the supply side, uncertainties persist regarding both the duration of the intensified safety inspections and the pace at which mines currently under suspension will resume operations. As of early June, the rate at which suspended mines are restarting production has fallen short of expectations—with several mines yet to resume operations—resulting in a relatively tight supply of domestically produced coking coal in the short term. On the demand side, blast furnace utilization rates at numerous steel mills remain at high levels; coupled with generally low inventory levels across both coke and steel enterprises, the demand for inventory replenishment is expected to demonstrate strong resilience in the near term. In summary, the coking coal market is highly likely to maintain its strong upward trajectory throughout the first half of June. Future market movements will continue to depend heavily on the evolving supply-demand landscape and actual transaction volumes for construction materials.

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