Kailuan Energy Chemical Co., Ltd. said tight supply is expected to dominate the coking coal market in the near term, keeping prices elevated, though a deepening seasonal lull in steel demand will likely pressure the market later.

On the coke front, the company noted that previously restricted coal mines are gradually resuming normal production, slightly improving raw coking coal supply and dragging down prices, which has weakened support for coke prices. At the same time, the seasonal downturn in steel consumption has reduced demand from steel mills. The supply-demand balance is loosening, pointing to a weaker coke market.

Looking at the coke industry's future, Kailuan said coke margins are being squeezed by both coking coal and steel, keeping profitability weak.

China's total conventional coke oven capacity stands at around 550 million tonnes per annum (Mtpa), a large base that is undergoing continuous structural optimization. The country's annual metallurgical coke output is about 420 million tonnes, providing solid support for the steel industry.

As older, smaller coke ovens are phased out, supply-demand dynamics are gradually improving and industry concentration is rising. Small companies relying solely on external coke sales face huge survival pressure, while integrated players with steel-coke or coal-coke operations, tar deep processing and waste heat utilization can weather cycles.

The long-process steelmaking route will retain cost advantages for the next 20-30 years and is unlikely to be replaced in the short term, the company said.

Kailuan said its coal mines produce raw coal that is washed into three products: washed coal, washed slack and coal slime. Washed coal is supplied to downstream coking plants for blending, while washed slack and coal slime are used as fuel by power plants.

Washed coal customers are divided into medium- to long-term contract users and key quarterly contract users. Sales are on a spot basis. Medium- to long-term contract users follow a pricing mechanism of "annual volume lock, quarterly pricing, monthly adjustment", while key quarterly contract users use "quarterly volume lock, monthly adjustment", with prices adjusted to market conditions.

The company's coking coal products are mainly sold to steel mills including Angang Steel, Benxi Steel, Shougang and HBIS.

Kailuan's coking subsidiaries source some coking coal from the company, with the remainder coming from Kailuan Group, Shougang, HBIS and the open market. Its coke products are mainly sold to Shougang, Chengde Steel, Tangshan Medium Plate and other nearby steel customers, with a small volume shipped by sea to Guangdong and Jiangsu provinces.