Coking coal market continued to soften in China's main production areas, as the first coke price cuts rippled across the upstream sector. Subdued sentiment, cautious buying by major purchasers, and rising inventories at some mines kept coal prices under downward pressure.

On the supply side, major coal-producing regions maintained relatively steady production with modest growth, curbed by underground issues.

A coal mine in Luliang, Shanxi, has announced plans to halt production after New Year's Day due to depleted underground reserves, Sxcoal learned. This mine, which mainly produces raw 1/3 coking coal, has a designed capacity of 1.5 million tonnes per annum and currently produces about 4,000-5,000 tonnes of raw coal per day. The shutdown is expected to last for an extended period, pending approval of a new mining district.

The latest coke price cuts implemented on December 1 dampened the coking coal market, strengthening bearish sentiment. Coke producers, facing squeezed margins, were in no rush to refill their stocks. Most of them took a wait-and-see strategy and avoided large-scale purchases.

Some low-stock coking plants replenished, mainly in small-volumes and for cost-effective grades. This is less likely to reverse the ongoing downtrend amid prevailing negative factors. A few miner sources reported slightly improved sales compared to the past two weeks, but transactions remained sluggish in the broader spot market.

In Shandong, coking coal miners reported growing selling pressure as coking plants prioritized essential restocking after a 50-55 yuan/t coke price drop on December 1. Some miners reduced prices for washed gas coal (S 0.5%, GRI 75) by 30 yuan/t to 1,050-1,060 yuan/t on December 2, ex-washplant with VAT and in cash. Large miners saw minimal sales pressure, keeping gas coal prices stable.

One major miner in Wuhai of Inner Mongolia lowered coking coal prices by 40-70 yuan/t on December 1, sending the total decline to 140-220 yuan/t since last month. Prices for low-sulfur 1/3 coking coal (S 0.8%, A 12%) fell 70 yuan/t to 1,140 yuan/t, ex-washplant with VAT. Mid-sulfur primary coking coal (S 1.8%, A 11%) dropped 40 yuan/t to 1,140 yuan/t, while high-sulfur fat coal (S 2.5%, A 9%) decreased by the same to 1,160 yuan/t.

In Shanxi, some Luliang-based miners trimmed prices of low-sulfur primary coking coal (S 1%, A 11%, GRI 80) by 50 yuan/t to 1,450 yuan/t, ex-washplant with VAT, effective December 1. This sent the cumulative decline to 230 yuan/t since November.

"Our sales remain lackluster even after we have cut coal prices by a total of 120 yuan/t," said a Jinzhong-based miner in Shanxi.

Many miner sources voiced concerns about rising stockpiles. "Inventories begin to climb as repeated price reductions fail to buoy trading activity," another Shanxi-based miner source noted.

On December 2, the CCI index for Shanxi low-sulfur primary coking coal fell 9 yuan/t day on day to 1,565 yuan/t, ex-washplant with VAT. CCI indexes for mid- and high-sulfur primary coking coal stood at 1,300 yuan/t and 1,289 yuan/t, respectively, down 80 yuan/t and 75 yuan/t.