Sxcoal Issue 35# | China's 2024 coking coal market in doldrums; what's on the horizon for 2025?
Dive into the challenges faced by China's coking coal market in 2024 and prepare for the year ahead.
China's coking coal market has faced persistent challenges in 2024, with a gradual production increase and high imports meeting tepid demand due to a negative cycle in the coal-coke-steel industry.
Weak demand meets rising supply
With less than two months to wrap up the year, the downstream steel industry remains stagnant as the real estate sector struggles, infrastructure construction slows, and the manufacturing sector fails to bolster demand.
Steel prices remained at a low ebb, dampening profitability and prompting cautious raw material restocking by steelmakers, which weighed on coke and coking coal demand.
However, domestic coking coal production gained momentum despite a slow pace at the start of the year, coupled with robust imports, resulting in a supply surplus.
Sxcoal's data showed the total effective domestic coking coal supply reached 351 million tonnes and net imports came in at 89 million tonnes by the end of September, sending the total supply to 440 million tonnes in the first nine months. Coking coal demand, nevertheless, lagged at 437 million tonnes. That means a supply surplus of 3.28 million tonnes, a further expansion of 18.15% compared with the preceding year.
Such imbalance exerted downward pressure on prices. As of November 21, the CCI index for Shanxi low-sulfur primary coking coal stood at 1,557 yuan/t, ex-washplant with VAT, slumping by 903 yuan/t or 36.7% year on year. The index for Shanxi high-sulfur primary coking coal was 1,423 yuan/t, a 766 yuan/t or 35% dive compared with the year-ago level.
Price trajectory
The Chinese domestic market started the year 2024 with high coking coal prices but quickly lost ground following continued rebound in supply.
From January to early April, coking coal supply returned to a steady growth post-Spring Festival, yet demand from coking plants presented limited signs of improvement. After eight rounds of decline totaling 800-880 yuan/t during the period, cokemakers suffered intensified losses and were forced to scale back on purchases and aggressively press down coking coal prices. The CCI index for Shanxi low-sulfur primary coking coal logged a losing streak totaling around 840 yuan/t during the same period.
Between mid-April and the first half of May, improved steel demand and profitability incentivized steel mills to lift production, leading to improved demand for coke. Coking coal prices, thus, enjoyed a short-lived recovery.
Over mid-May to early September, a retreat in the steel market pressured coke prices again, especially during late July-early September, when coke prices underwent eight rounds of downward corrections totaling 400-440 yuan/t. This resulted in a sharp fall in coking coal prices, with the CCI index for the low-sulfur grade plunging by nearly 400 yuan/t.
In July and August, seasonal weakness in steel demand, compounded by the change in national rebar standards and the resulting large-scale selloff activities and widespread maintenance on blast furnaces, further eroded demand for coke and coking coal.
In early September, the market was disappointed by the anticipated "Golden September" period, as lackluster demand from major steel-consuming industries significantly depressed steel prices and production enthusiasm. This negatively impacted the upstream markets again, accelerating the materialization of the eighth round of 50-55 yuan/t coke price reduction and weighing on feed coal prices.
From late September to early October, a temporary rebound occurred as steel mills resumed production and replenishment leading up to the week-long National Day holiday. Favorable macroeconomic policies also lifted sentiment, briefly boosting coking coal prices.
From mid-October, the waning macro-economic support and the end of the seasonal steel peak led to price declines again, marking another bearish cycle in the ferrous commodity chain.
Outlook
Following a slow market in 2024, will there be a recovery or further headwinds in the upcoming year?
Coking coal prices in 2025 will largely depend on policy changes, demand recovery, domestic supply dynamics, and global trade flows. Our latest annual report "2024 China Coking Coal and Coke Market Study and 2025 Outlook" examines these factors, outlining potential scenarios for the market development.
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