Prevailing bearish sentiment and poor offtakes further dragged down China's coking coal market last week. Coking plants mostly eased purchases after the fifth coke price cut. Some traders and washing plants also retreated from the market. This resulted in stagnant coking coal offtakes and rising stocks, despite price cuts, further depressing coking coal prices.

The Index

The CR China Coking Coal Price Index (CRCP) was 1,515.6 yuan/t on December 30, down 2.60% week on week. The CR China Coking Coal Stock Index (CRCS) was 77.2 points, 1.31% higher than the week-ago level.

Lately in the market

More coking coal mines suspended or capped production approaching the year-end after completing annual targets or safety concerns, resulting in continued supply contractions. Raw coking coal output at Sxcoal-surveyed 227 mines dipped 1.78% from a week ago to 8.82 million tonnes in the week ending December 25. The capacity utilization at these mines averaged 87.36%, down 1.58 percentage points week on week.

Most coking plants have restocked their coking coal to safe levels and are reluctant to buy more due to ample supply and declining feed coal prices. As of December 25, coking coal stocks at 100 surveyed coking plants could sustain 8.09 days of usage, down 0.1 day from the previous week.

Major steelmakers asked for the fifth coke price cut, fueling wait-and-see sentiment among coke producers. Traders and washing plants focused on immediate sales, adding to offtake pressure at mines. Some coking coal miners hence suffered from mounting inventories. Sxcoal's data showed that raw coking coal stocks at surveyed mines reached 3.46 million tonnes as of December 25, up 2.67% on the week, while washed coal stocks increased by 4.26% from a week ago to 2.69 million tonnes.

Despite ongoing supply contractions in major coking coal bases, most mines that halted or limited production would resume post-New Year's Day, suggesting limited impact on short-term supply. Those mines ceasing operations alongside mining accidents or safety checks also posted minimal challenges as they had already lowered output amid underground issues.

Coking coal prices trended downwards in most parts of Shanxi, primarily attributed to inactive purchases. Loss-making coke producers refrained from feed coal purchases in light of the fifth coke price cut. Some traders also adjusted down offer prices to boost sales, and some washing plants have withdrawn from the market anticipating further price cuts or due to cost pressure, curbing coking coal trades. Some coking coal grades even experienced accelerated price drops last week.

Prices for low-sulfur primary coking coal (S 0.5%, GRI 80-85) in Linfen declined 90 yuan/t last week to 1,450 yuan/t, taking the cumulative reduction to 350 yuan/t since mid-October. In Jinzhong, high-sulfur coking coal (S 1.5-1.8%, GRI 90) dropped to about 1,350 yuan/t, a total slide of 300 yuan/t since mid-October. Prices for multiple coking coal grades have hit the lowest levels in nearly three years.

Online auctions also encountered setbacks, with high failure rates observed. Over half of deals cannot find buyers each day during the reporting week. In Changzhi, lean coking coal (A 8%, S 0.5%, GRI 65) was traded at 1,380 yuan/t on December 24, 70 yuan/t lower than that on December 20. On December 26, one miner in Linfen failed to sell 30,000 tonnes of fat raw coal (S 4%, GRI 95) at 500 yuan/t.

On December 27, the Fenwei CCI index for Shanxi low-sulfur primary coking coal was assessed at 1,425 yuan/t, ex-washplant with VAT, tumbling 93 yuan/t week on week; the index for Shanxi high-sulfur coal declined 65 yuan/t week on week to 1,253 yuan/t.

Coking coal supply moderately tightened in Wuhai, Inner Mongolia. Sluggish demand, along with persistently falling prices in Shanxi and Mongolia, dampened trading activities and pressed down prices in the region. Prices for low-sulfur fat coal (A 12, S 0.8%) declined 40 yuan/t from December 16 to 1,250 yuan/t on December 24, while mid-sulfur fat coal (A 15%, S 1.0%) decreased by 30 yuan/t to 1,050 yuan/t on the same day, indicating larger declines compared to previous weeks.

The coking coal market weakened in Shandong. Washed gas coal (S 0.5%, GRI 75) prices were temporarily stable at 1,180 yuan/t. Local coking plants prioritized digesting existing stocks and held back on purchases in the wake of the fifth coke price cut. This, together with repeated downtrend of Shaanxi washed gas coal prices, further hindered coking coal sales and increased stocks at mines. Coking coal prices are expected to go down further amid ample supply and pessimistic sentiment.

Import market

The seaborne import market kept quiet last week due to the Christmas holiday. High-priced Australian cargoes saw sustained price slides. Deals of far-month hard coking coal resold by end buyers were heard settled at index levels after consecutive price cuts. Australian hard coking coal prices declined to $190/t FOB, down $16.2/t week on week, translating to about 1,698 yuan/t CFR China with VAT. Yet, Indian inquiries increased on December 27, owing to the implementation of coke import quotas in 2025.

Futures prices fluctuated downwards, combined with retreating coke prices, squeezing coke-producing profits and subsequently eroding coke producers' purchasing enthusiasm. This forced portside traders to slightly cut prices, while some low-priced cargoes stayed firm. Spot prices for Australian hard coking coal declined 20-30 yuan/t from a week ago to 1,460-1,500 yuan/t.

Mongolian coal inflows at China's Ganqimaodu border port exceeded 40 million tonnes so far, smashing historical highs and fulfilling annual targets. Recent customs clearance activities were running at low levels because of heavy inventory pressure at supervision warehouses. Daily customs clearance averaged 420 trucks at the border crossing over December 23-26, down 91 trucks on the week.

Coke and steel producers exercised caution in purchases following sustained declines in coke prices. Expedited mine-mouth price drops further depressed Mongolian coal transactions. Traders, struggling with increased offtake difficulties, continued to cut offer prices. Prevailing prices for Mongolian 5# raw coal under long-term contracts fell to 930-940 yuan/t, ex-stock Ganqimaodu with VAT.

Slumping domestic prices led to more cautious procurement at Ceke port. Mongolian mine-mouth prices remained steady, causing portside traders to face greater sales pressure than domestic coal traders, resulting in continued stock buildup at supervised warehouses. Prices for certain raw coal grades drifted lower at the port, with MAK A raw coal down 20-50 yuan/t week on week to 720-750 yuan/t and South Gobi A raw coal down 20-30 yuan/t to 750-780 yuan/t.

Daily throughput at Mandula port averaged 176 trucks from December 23 to December 26, down 92 trucks from a week ago, mainly due to fading shipping interest given weakening coking and thermal coal markets at the port. Recent coke price decreases compounded market pessimism. Downstream buyers mostly adopted a wait-and-see approach, cooling spot trading activities and pushing down offer prices.

Forecast

The Chinese coking coal market is expected to face continued downward pressure this week, driven by on-demand buying from coke and steel producers following the fifth coke price cut, and potentially exacerbated by increased mine inventories.