This week, ferrous metals moved sideways and upward. During the week, as US-Iran negotiations made no progress and the Strait of Hormuz remained closed, combined with declining US crude oil inventories, Brent crude oil surged sharply, driving coking coal higher. Although BHP port spot cargoes were available for purchase, which was bearish for market sentiment, futures had already priced in related expectations earlier, so iron ore pullback was limited and cost support was relatively neutral. The Politburo meeting held mid-week had low direct correlation with ferrous metals, and ferrous metals fluctuated at highs during the week. Spot market side, end-users restocked at low prices before the holiday, and as futures rose in the latter half of the week, speculative demand was also released...

[SMM Coking Coal and Coke Daily Brief] In terms of supply, coking enterprises' input coal costs edged up slightly, but after two rounds of coke price increases, coking enterprises' profits recovered significantly, production enthusiasm was high, and coke supply remained stable with a slight increase. Demand side, steel mill hot metal production dipped slightly this week, but overall hot metal production remained at a high level. Additionally, steel mills had restocking demand ahead of the Labour Day holiday, and buyer enthusiasm for coke procurement was moderate. In summary, there was still room for negotiation on the third round of coke price increase, and the coke market was expected to hold up well in the near term.

SMM April 21: As the anti-involution policy continued to advance, the second round of coke price hikes was officially implemented. This, combined with persistently tight spot supply and demand, capacity constraints caused by Daqin Railway maintenance, the highlighted coal substitution advantage driven by high oil prices, and incremental demand from continued increases in hot metal production, created multiple positive factors that drove the coal mining sector to a two-day winning streak. Specifically, on the supply side, the Daqin Railway spring concentrated maintenance restricted north-to-south coal transportation capacity, inventories continued to decline, and the implementation of coke price hikes further transmitted cost support, pushing coal prices steadily upward. On the demand side, a stronger-than-usual off-season pattern emerged, with hot metal production continuing to edge up, coupled with significant YoY and MoM increases in daily consumption at coastal power plants. Restocking demand from the construction materials and other industries was released ahead of the Labour Day holiday, and with power plant inventories at low levels, seasonal restocking demand was activated early. In addition, tensions in the Middle East pushed up international oil prices, highlighting the economic advantage of coal-fired power, while the defensive attributes of the coal sector attracted some capital inflows, jointly driving the sector higher. As of the close on April 21, the sector gained 2.27%, with individual stocks performing actively. Gansu Energy Chemical, Huayang New Material Technology, Yankuang Energy, Shaanxi Coal Industry, and Lu'an Clean Energy led the gains. Futures market: As of the daytime close on April 21, ferrous metals mostly rose, with coking coal up 1.53% and coke up 2.42%. Spot market Hot metal production is expected to continue edging up this week On April 15, the blast furnace operating rate of the 242 steel mills tracked by SMM rose WoW. The sample steel mills' daily average hot metal production increased WoW. Last week, according to the latest SMM survey, no new blast furnace maintenance was reported, and a total of 2 blast furnaces resumed production, mainly concentrated in Shanxi. Currently, blast furnace profits were under pressure, and most steel mills produced normally as planned. The pace of maintenance and production resumptions remained generally stable, with hot metal production staying relatively steady. Looking ahead to this week, hot metal production is expected to continue edging up. Spot market: On April 21, the Linfen low-sulphur coking coal price was quoted at 1,530 yuan/mt. The Tangshan low-sulphur coking coal price was quoted at 1,550 yuan/mt. The nationwide average price of first-grade metallurgical coke (dry quenching) was 1,845 yuan/mt. The nationwide average price of quasi-first-grade metallurgical coke (dry quenching) was 1,705 yuan/mt. The nationwide average price of first-grade metallurgical coke (wet quenching) was 1,490 yuan/mt. The nationwide average price of quasi-first-grade metallurgical coke (wet quenching) was 1,400 yuan/mt. Coking coal market: Production at some mines that had previously cut production recovered somewhat, but major mines were still affected by safety inspections, and the incremental supply of coking coal remained limited. Moreover, futures rallied, market sentiment warmed notably, stimulating some coal grades to stabilize and rebound. In the short term, coking coal prices may hold up well. Coke market: In terms of supply, coke enterprises' per-mt profitability has recovered, production enthusiasm was moderate, shipments were relatively smooth, and in-plant coke inventory remained at low levels. Demand side, steel mills maintained strong production enthusiasm, hot metal production edged up, providing solid just-in-time procurement support for coke. Additionally, with the Labour Day holiday approaching, some steel mills released pre-holiday restocking demand. Overall, the coke supply-demand structure remained tight, and the coke market may hold up well in the short term. Institutional Views A Datong Securities research report showed: on coking coal, driven by downstream restocking and coke price hike expectations, port coking coal prices rose, while mine-mouth coal prices showed some divergence. At ports, Shanxi-origin coking coal warehouse-pickup prices at Jingtang Port rose WoW, while mine-mouth prices generally showed a stable-to-declining trend. Internationally, Australian Peak Downs hard coking coal CFR China prices were flat WoW. In the short term, with continued growth in hot metal production, sentiment boost from coke price hikes being implemented, and downstream restocking demand release, the coking coal market may see slight upward momentum. A Shanxi Securities research report noted: currently, Daqin Line maintenance-related destocking and high landed costs of imported coal supported coal prices. Power plant daily consumption was at seasonal lows, while chemicals, steel mills, and other industries drove coal demand. Attention should be paid to the sustainability of just-in-time procurement from non-power industries and the summer electricity consumption peak after May. Investment recommendation: high uncertainty from US-Iran conflicts corresponds to high volatility, but oil prices are unlikely to decline significantly in the short term. Recovery signals have been confirmed, coal PPI is about to turn positive, coal prices are expected to rise, and coal stocks are poised for a Davis Double Play. A Guohai Securities research report suggested that, from a broader perspective, the supply-side constraint logic for the coal mining industry remains unchanged, while demand may experience periodic fluctuations, with prices also showing certain oscillations and dynamic rebalancing. From the long-term industry development trend, the aforementioned driving factors still exist, and coal prices still have upward momentum over the long term. The process may be tortuous, but the direction should be clear. Leading coal enterprises have high asset quality, abundant cash flows on their books, exhibiting "five highs" — high profitability, high cash flow, high barriers, high dividends, and high margin of safety. Since 2025, multiple central and state-owned coal enterprises have initiated share buyback and asset injection plans for their publicly listed firms, also releasing positive signals, demonstrating confidence in coal enterprise development, and enhancing corporate growth potential and stability. A Guangda Futures research report analyzed: Coking coal: supply side, most mines at production areas operated largely normally. There were reports that Mongolian coal throughput decreased due to factors such as fuel shortages. Recently, downstream buyers moderately restocked raw material coal, and overall inventory continued destocking. Demand side, steel mills maintained high hot metal production, with a preference for coke procurement. The second round of coke price increases was implemented, and coking enterprises restocked some coal grades with higher cost-effectiveness. Coking coal futures are expected to hold up well in the short term. Coke: Supply side, coking enterprises in some regions were constrained in operations due to government ultra-low emission retrofit requirements. Coking enterprises saw good shipments, and coke inventory mostly remained at low levels. Demand side, steel mills had a relatively strong willingness to produce, and mainstream steel mills accepted the second round of coke price increases. Transportation restrictions emerged in some regions, and steel mills experienced continuous destocking, with high procurement enthusiasm. Coke futures are expected to fluctuate upward in the short term. Southwest Futures stated: In the short term, changes in the Middle East situation may still have sentiment impact on futures prices, but the impact on the actual supply-demand pattern of coking coal and coke is relatively small. Coking coal side, production at some mines in major producing areas was affected, but the impact on production was limited. Demand side, the online auction atmosphere improved recently, and quotes for some coal grades were raised. Coke side, some coking enterprises currently cut production, but the change in supply was relatively small; demand side, national daily hot metal production may continue to rebound, and demand expansion provides support for coke prices; the second round of spot coke price increases is being implemented. From a technical perspective, coking coal and coke futures may continue to move sideways in the medium term. Strategy-wise, investors may watch for buying opportunities at low levels and pay attention to position management. Recommended reading:

[SMM Coking Coal and Coke Daily Brief] News: The second round of coke price increase was officially implemented, with procurement prices raised by 50-55 yuan/mt, effective from midnight on April 20. In terms of supply, coke producers maintained moderate per-mt profitability, production remained normal, shipments were smooth, and in-factory inventory largely stayed at low levels. Demand side, steel mills maintained high and stable operating rates, in-factory coke inventory continued to pull back, and demand for coke remained solid. However, steel mill profits did not see significant recovery, and steel mills still showed resistance sentiment toward further coke price increases. Overall, the second round of coke price increase has been implemented, but the market is in a digestion phase. A third round of increase is unlikely to materialize in the short term, and the coke market may hold up well and remain generally stable with slight rise going forward.

[SMM Coking Coal and Coke Daily Brief] Supply side, coking enterprises in Shanxi, Hebei, and other regions saw tightened production due to the concentrated push by local governments for ultra-low emission retrofits. However, production in other regions rose instead of declining, keeping overall coke supply stable with a slight increase. Demand side, steel mill hot metal production continued to increase, driving strong rigid demand for coke. Steel mills with low inventory had a strong willingness to restock, while other steel mills purchased as needed with stable rigid demand. Overall, coke supply and demand remained in a tight balance. The second round of coke price increases is expected to materialize, and the coke market may hold up well next week.

[SMM Coking Coal and Coke Daily Brief] Supply side, coking enterprises saw moderate shipments, coke inventory remained at low levels, and most coking enterprises maintained normal production levels, keeping coke supply relatively stable. Demand side, downstream steel mills operated at a good pace, daily average hot metal production increased, and some steel mills with low inventory showed relatively strong willingness to restock coke. In summary, the coke supply-demand pattern was basically balanced, but cost declines were limited. The second round of coke price increase is still expected to materialize, and the short-term coke market is expected to hold up as generally stable with slight rise.

[SMM Coking Coal and Coke Daily Brief] Supply side, market sentiment improved recently, and coke enterprises actively increased shipments, leading to a continued decline in coke enterprise coke inventory. Demand side, steel mills currently maintained high production enthusiasm, with daily average hot metal production continuing to increase, sustaining rigid demand for coke. However, steel mill profits were moderate recently, leading to poor acceptance of coke price hikes. Most steel mills purchased coke as needed, lacking willingness to restock. In summary, coke and steel enterprises will continue to negotiate, and the coke market may remain stable in the short term.

[SMM Coking Coal and Coke Daily Brief] Supply side, coke producers had relatively small losses and moderate production enthusiasm, with coke supply remaining at high levels. Coupled with strong downstream demand, coke producers' coke inventory stayed at low levels. Demand side, steel mills' daily average hot metal production edged up, strengthening rigid demand for coke, and most steel mills currently showed moderate purchasing enthusiasm. In summary, coke fundamentals exhibited a tight balance, but cost support is expected to weaken, and the short-term coke market is likely to hold up well with a generally stable with slight rise trend.

[SMM Coking Coal and Coke Daily Brief] News: Leading coke enterprises initiated a coke price increase of 50-55 yuan/mt, effective from 00:00 on April 13. In terms of supply, coke enterprises suffered relatively small losses, and production enthusiasm was moderate. Current coke supply remained stable. Combined with good shipments from coke enterprises, coke inventory continued to stay at low levels, with some coke enterprises holding back from selling. Demand side, steel mills maintained strong production enthusiasm, hot metal production increased again, and daily coke consumption rose. Additionally, affected by maintenance on some railway sections, coke deliveries were disrupted, and coke inventory at some steel mills declined slightly. In summary, some coke enterprises still held bullish expectations for the market outlook, and the coke market is expected to be generally stable with slight rise in the short term.

[SMM Coking Coal and Coke Daily Brief] News: Individual coke enterprises in Inner Mongolia initiated a coke price increase of 50-55 yuan/mt, effective from 00:00 on April 13. In terms of supply, most coke enterprises currently had relatively small losses, with stable operating rates and good shipments, and in-plant coke inventory continued to decline. Demand side, steel mills maintained high and stable operating rates, hot metal production fluctuated at highs, daily coke consumption increased, and affected by maintenance on some railway sections, coke arrivals were disrupted, leading to a slight decline in coke inventory at some steel mills. In summary, some coke enterprises still held bullish expectations for the market outlook, and the coke market is expected to be generally stable with slight rise in the short term.