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Coke & Blast Furnace Market Summary

Coke Oven Capacity Utilization

The average capacity utilisation rate of coke oven stood at 67.36%, up 1.3 percentage points WoW. The coke oven capacity utilization rate in Shanxi was 65.4%, up 0.6 percentage points WoW.

This week, due to the continued improvement in demand from downstream steel mills and a significant increase in speculative demand from traders, coke prices have seen two rounds of price increases. However, due to the strong prices of coking coal, coking companies’ profit recovery fell short of expectations, and therefore coking companies were not willing to resume production, only some coking companies slightly increased their operating rates to ensure the supply of long-term orders.

In the follow-up, with the implementation of the third round of price increases, and the profits of coke companies turned from negative to positive and the molten iron output of steel mills continued to rise, the demand for coking coke replenishment was strong. Therefore, driven by downstream demand and profit growth, the operating rate of coking plants may continue to rise slightly.

Coke Inventories

SMM statistics showed that the coke inventories of coking plants were 264,000 mt this week, up 8,000 mt or 3.12% WoW. The coking coke inventories were 2.772 million mt, up 363,000 mt or 15.1% WoW. The coke inventories at steel mills totalled 2.452 million mt, down 74,000 mt or 2.93% WoW.

This week, downstream steel mills continued to resume production, coke demand continued to improve, and the operating rate of coking enterprises increased. In terms of inventory, due to the relatively strong performance of raw material prices and the relatively certain expectation of rising coke prices, coking companies replenished their coking coal inventories, and their coking coal inventories increased significantly. However, as there was no obvious improvement in the profits of coking enterprises, coking coal inventories still declined slightly. As for steel mills, their production was relatively active due to their good profits, and their coking coke inventories fell slightly. At the port, as bullish expectations for coking coke strengthened, traders’ inventories increased significantly.

Looking ahead, due to strong bullish expectations for coke prices and a decent recovery in downstream demand, downstream steel mills may further increase their coke purchases for cost considerations, and steel mills’ coke inventories may grow again. As for coking enterprises, since upstream coal prices were higher than coking coke, the profit recovery of coking enterprises was lower than expected, so the coke inventory of coking enterprises may remain stable. With the increase in coking coal prices, the purchasing willingness of coking enterprises may decrease, and the coking coal inventory of coking enterprises is expected to decline slightly.

Blast Furnace Restarts

Ferrous metal market moved sideways last week. Raw materials prices were stronger than steel prices. Recently, there were rumours that China will focus on inspecting HRC exports, fuelling wait-and-see mood among players. Subsequently, the NDRC and the Ministry of Finance (China) completed the screening of local government special bond projects in 2024. In the second half of last week, a significant rise in pig iron output amid previous maintenance of BFs improved market sentiment. In spot market, steel prices fluctuated narrowly last week. Replenishing demand appeared modest before the Labour Day holiday.

Looking at this week, restart of BFs will boost raw material prices, with coke prices likely rising. Moreover, there will be macro-positive expectations. Steel prices may still hike somewhat this week, but may retrace down in the short run, owing to the end of pre-holiday restocking of end-users.

Source: SMM