SunSirs: Fourth Round of China Coke Price Hikes Implemented; Prices Up Over 600 RMB/Ton This Year

Coke prices have recently surged. Effective September 3, the fourth round of price increases was implemented: wet-quenched coke rose by 100 RMB/tonne and dry-quenched coke by 110 RMB/tonne, bringing the cumulative increase for this round to 350–385 RMB/tonne.

Throughout the year, the overall trend for coke prices has been upward. Currently, HBIS (Hebei Iron & Steel) Grade I wet-quenched metallurgical coke (specifications: A≤12.5, S≤0.7, CSR≥65, MT≤7) is quoted at 2,230 RMB/tonne—an increase of 590 RMB/tonne year-on-year (compared to September 1, 2025) and up approximately 620 RMB/tonne from the price at the end of December 2025.

Annual Trend: Initial Decline Followed by a Rise

Since the beginning of the year, coke prices have followed a pattern of "initial decline followed by a rise," characterized by a strong upward trajectory in the first half of the year and high-level stabilization in the second half. The primary driving force shifted from the onset of demand to strong cost-push factors.

The market performance for the year can be broadly divided into four key stages.

Stage 1 (January–March): Coke prices fluctuated with a bearish bias; after an initial drop and a subsequent rebound, the overall trend was a slight decline. The core reasons included the traditional off-season for steel demand at the start of the year and a post-Spring Festival drop in coking coal prices, which weakened cost support. Additionally, there was a temporary mismatch between supply and demand in the coke market. Consequently, prices underwent two rounds of cuts and one round of increases, resulting in a slight overall decline.

Stage 2 (April–mid-May): Coke prices saw a moderate rise, with three consecutive rounds of price increases. The main driver was the pickup in demand as the steel industry entered its seasonal peak; blast furnaces at steel mills resumed production and hot metal output rebounded, boosting the essential demand for coke. Furthermore, escalating geopolitical conflicts heightened expectations of tighter international energy supplies, causing a geopolitical "premium" on coal prices and driving up coke production costs. As a result, coke prices rose by a cumulative three rounds, with increases totaling 150–175 RMB/tonne.

Stage 3 (Late May–June): Coke prices experienced a strong, rapid surge, rising for nine consecutive rounds. The primary driver behind this sustained price rally was "cost-push" pressure. A pivotal event occurred on May 22, when a major coal mine safety accident in Qinyuan, Shanxi, marked a turning point for prices throughout the year. This incident triggered a sharp drop in domestic supply and led to a comprehensive tightening of environmental and safety regulations; numerous coal mines in Shanxi suspended operations, causing coking coal output to fall to its lowest level for that period in recent years and driving coking coal prices up by over 400 RMB/tonne in the short term. Consequently, coke production costs surged, forcing coke producers to cut output and further tightening coke supplies. Driven by these strong cost pressures, coke prices underwent a series of rapid, consecutive hikes; by the end of June, nine rounds of price increases had been implemented in the first half of the year, totaling 350–405 RMB/tonne and pushing prices beyond the previous year's highs.

Regarding profitability, the coke industry had long been struggling. While the industry saw mixed results in 2023—with companies like Shanxi Coking Coal, Meijin Energy, Yunmei Energy, and Yunwei Shares remaining profitable—the entire sector fell into widespread losses in 2024, with only the listed company Shanxi Coking Coal maintaining a marginal profit. This pattern persisted into 2025. No significant improvement was evident in the 2026 interim reports; all seven coke enterprises—Meijin Energy, Shanxi Coking Coal, Shaanxi Heimao, Baotailong, Yunmei Energy, Yunwei Shares, and Antai Group—reported losses for the first half of the year, with none turning a profit.

Notably, Meijin Energy’s profit plummeted from RMB289 million in 2023 to a loss of RMB1.143 billion in 2024, followed by continued heavy losses; it reported a loss of RMB599 million in its 2026 interim report, making it the hardest-hit company in the sector. Shaanxi Heimao suffered losses for three consecutive years, with the deficit widening annually—recording losses of RMB512 million, RMB1.158 billion, and RMB1.177 billion from 2023 to 2025, respectively, and a further loss of RMB366 million in its 2026 interim report.

Coke producers reluctant to sell while operating at a loss

Since July, the market has entered a fourth phase, characterized by coke prices fluctuating at high levels. The primary reason lies in robust cost support: the resumption of production at domestic coal mines has been slow, and reduced customs clearance volumes for Mongolian coal have kept coking coal supplies tight, maintaining high prices.

The market trend was not a straight upward climb; periodic pullbacks occurred during the hot, rainy season of July and August. This period coincides with the traditional off-season for steel consumption; construction and infrastructure projects slowed down, leading to a decline in steel demand. Alongside sluggish steel prices, cost pressures from coke eroded steel mill profitability. Surveys indicate that by the end of July, the profitability rate of steel mills had dropped from 63.2% in May to less than 35%. Facing losses, mills voluntarily undertook blast furnace maintenance and curtailed output. As average daily hot metal production fell, the essential demand for coke decreased, triggering a negative market feedback loop that drove coke prices down through three rounds of declines. Entering August, falling coke costs allowed steel mill profits to recover; blast furnaces gradually resumed operation, and hot metal output returned to relatively high levels.

The new round of price hikes initiated in late August was driven primarily by the continued upward pressure of coking coal costs. Slow production resumption at major mines and reduced Mongolian coal imports kept coking coal supplies tight, pushing prices higher. Most coke producers remained unprofitable due to high costs and voluntarily limited output—with major regions cutting production by 40%–50%—thereby contracting coke supplies. Meanwhile, downstream steel mills maintained relatively high hot metal output and resilient demand, creating a situation where "mills clamor for deliveries while coke producers are reluctant to sell."

Regarding whether coke producers are indeed withholding stock, a representative from the Board Secretary's office at Yunmei Energy stated they had no specific information, noting only that the company's production and operations remain normal.

Currently, the coke market is characterized by tight supply-demand dynamics, widespread losses among coke producers, and steel mills being forced to accept price hikes. Upstream cost pressures and supply contractions are propagating throughout the entire industry chain.

Although coke prices have risen through three consecutive rounds of increases, the magnitude of these hikes pales in comparison to those of coking coal, causing coke producers to remain in the red. Data shows that coke producers across all major production regions are operating at a loss. Faced with demands from coke producers to raise prices, steel mills have adopted an attitude of passive acceptance combined with active procurement. On September 3, the fourth round of coke price hikes was implemented—increasing prices by 100 RMB/tonne for wet-quenched coke and 110 RMB/tonne for dry-quenched coke—with steel mills showing a high level of acceptance. Despite poor profitability (with a profit rate of approximately 32.47%), steel mills have had to accept these price increases to secure the coke supplies necessary for production.

**Short-term Upward Trend Continues**

The fourth round of increases is unlikely to halt the upward momentum of coke prices in the short term; expectations remain for prices to rise further during the first half of September. In early September, the supply tightness resulting from voluntary production cuts by coke producers will persist. Coupled with high coking coal costs supporting prices, coke producers remain determined to maintain higher price levels, providing strong fundamental support for the rally. Following multiple rounds of price hikes in late August, steel mills' coke inventories have fallen to relatively low levels for the year, and demand for restocking ahead of the upcoming holiday remains. Even if hot metal output does not see a significant short-term rebound—limiting the growth of essential demand—concerns over supply shortages mean steel mills' procurement enthusiasm is unlikely to fade quickly, making further price increases probable.

Furthermore, as we move into mid-to-late September, market dynamics will likely shift from a focus on supply contraction to the verification of end-user demand for finished steel products. As hot weather subsides, construction activity in infrastructure and real estate is expected to pick up month-on-month. If steel trading improves, steel mill losses are reversed, and blast furnaces resume production, the resulting rise in hot metal output would provide further upward support for coke prices.

However, risks cannot be ignored. Most steel enterprises remain unprofitable and strongly resist high coke prices. If the peak season for finished steel falls short of expectations, steel mills might once again tighten raw material procurement and expand the scope of blast furnace maintenance. This could constrain further coke price increases and raises the risk of a renewed negative feedback loop.

Regarding inventories, the current low inventory levels at steel mills provide a floor for prices in the short term. Moving forward, close attention must be paid to the enforcement of production cuts by coke producers, the sustainability of restocking by steel mills, and trading volumes for finished steel products. Overall, there is a high degree of certainty regarding an initial rise in coke prices in September; however, the sustainability of this upward trend depends heavily on the materialization of downstream demand, and there is a risk of a subsequent pullback after an initial surge. (Source: China Times)

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