Expectations of implementing metallurgical coke price hikes for the second round continued to strengthen in the Chinese domestic market, underpinned by ongoing supply tightness amid squeezed profitability.

Prices for coking coal, particularly those premium grades, surged in recent weeks, pushing many coke producers into negative margins across major production areas, including Shanxi, Shaanxi, and Inner Mongolia. In particular, producers operating top-charging coke ovens suffered more severe losses.

Some miners in Xiangning of Linfen, Shanxi, raised offers of low-sulfur lean coal (S 0.5%, A 10%, GRI 70) by 40 yuan/t to 1,490 yuan/t on banker's draft and 1,480 yuan/t in cash, ex-washplant with VAT, effective September 24, with volume-based discounts of 10-30 yuan/t provided. This sent the aggregate growth to 70 yuan/t so far this month.

On October 24, a Hejin-based mainstream miner in Yuncheng of Shanxi lifted prices of low-sulfur washed lean coal (S 0.5%, A 10%, GRI 60) by 30 yuan/t to 1,450 yuan/t ex-washplant with VAT and on banker's draft, while lean raw coal rose by 30 yuan/t to 975 yuan/t, taking the total increases this month to 70 yuan/t and 50 yuan/t, respectively.

Loss-making companies, therefore, opted to scale back output or conduct facility maintenance. During the week ending October 22, the capacity utilization of Sxcoal-surveyed coking plants averaged 74.68%, contracting 0.17 percentage point from a week earlier, as per the latest weekly survey data.

Several cokemaker sources noted that they have initiated or extended maintenance shutdowns, citing economic inviability.

One Shanxi-based producer source, currently undergoing coke oven maintenance, stated that without a successful implementation of the second price hike in the following days, production cuts will likely extend into November.

In the downstream steel sector, profitability slipped, with some steelmakers operating at or near breakeven levels. However, molten iron production remained at elevated levels among steel mills despite a modest week-on-week dip, maintaining a strong pull on coke consumption.

Some steelmakers with insufficient stockpiles made active purchases from the spot market, supporting the underlying structural demand for coke.

Meanwhile, finished steel inventories at mills retreated to some extent during the shoulder season, so steelmakers somewhat eased their resistance to the proposed increases in coke prices by coking plants earlier this week.

Several steel firms in Tangshan, Xingtai, and Shijiazhuang of Hebei province, and Tianjin city decided to raise purchase prices of wet- and dry-quenching met coke by 50 yuan/t and 55 yuan/t, respectively, effective October 27.

Coke stocks at coking plants extended a downtrend, stemming from production constraints and steady dispatch. As of October 22, the stock of the Sxcoal-surveyed plants came in at 651,200 tonnes, down 18.7% week on week and hitting the lowest in almost two months.

Yet, some participants cast doubt about the sustainability of this momentum, noting that a third round of coke price increases needs stronger downstream support or clear macroeconomic policy signals. If steelmakers chose to conduct blast furnace maintenance in light of the looming winter season, it may temper coke demand.