Early trading today saw coking coal futures prices extend their downward trajectory, with the main contract closing at 1,457.5 yuan per ton, down 2.44%.
What are the primary supply and demand drivers behind the recent sustained decline in coking coal prices, and what risk factors warrant attention in the short term?
The recent price weakness in coking coal is mainly attributed to supply-side recovery expectations and persistent negative feedback pressure from the demand side.
On the supply side: In mid-September, multiple government departments jointly issued a notice outlining comprehensive measures to accelerate stable coal production and ensure supply. During the Mid-Autumn Festival holiday, Shanxi province convened a provincial-level meeting on coal safety, stable production, and supply assurance. The meeting emphasized that while strictly adhering to safety bottom lines, efforts should be made to fully promote the resumption of work and production, stabilize output, and accelerate the reversal of the production decline trend. Production mines were urged to reach full capacity as soon as possible, while mines under construction were instructed to commence operations and achieve efficiency promptly. Market expectations for a significant rebound in coking coal output in the longer term have strengthened considerably, weighing on futures prices.
From an external supply perspective, economic and trade teams from China and the United States reached a consensus that Chinese tariffs on coal imports from the U.S. will be incorporated into the "300 billion versus 300 billion" reciprocal tariff reduction framework. This will facilitate China's coal imports from the U.S. in 2027 and 2028. The news has generated certain expectations in the market regarding long-term incremental external coal supply, and the specific implementation details and procurement pace bear watching.
On the demand side: Steel mill profitability remains at low levels, hot metal output is declining, and negative feedback pressure from demand persists. As of September 25, the average daily hot metal output across 247 steel mills stood at 2.3566 million tons, down 1.97 million tons week-on-week. Blast furnace capacity utilization fell to 88.49%, while steel mill profitability further dropped to 6.93%. Profit pressure at steel mills is gradually transmitting to the production side. The peak demand season has failed to live up to expectations, reinforcing negative feedback expectations across the industrial chain.
Although expectations regarding coking coal supply and demand have undergone notable changes, several risk factors still warrant attention in the short term.
Supply recovery pace: Although some regions have issued requirements for rapid resumption of production, constraints such as safety rectification and underground conditions mean that it may take time for coal mines to progress from acceptance and resumption to reaching full capacity. High-frequency production data going forward should be monitored closely. If the recovery proves slow, expectations may face upward revision.
Policy factor changes: If regulatory policies on the mining side tighten, or if macroeconomic policies related to terminal real estate and infrastructure construction shift, short-term market sentiment across the entire ferrous complex could experience volatility.
Looking ahead, key areas to watch include the actual pace of production resumption at Shanxi coal mines, the profit recovery situation at downstream steel mills, and changes in hot metal output after the holiday. On the technical front, attention should be paid to the resistance level near the daily MA60 for the main coking coal contract. Liquidity effects may come into play ahead of the holiday, and investors should be mindful of unilateral position risks while approaching market fluctuations with caution.
Source: Mysteel, Jinshi Futures, Guotai Junan Futures Research Institute
Completion time: September 28, 2026, 15:40
This content is for learning and exchange purposes only and does not constitute investment advice. Receipt of this article does not signify that Guotai Junan Futures has established any business relationship with the reader. The company makes no guarantee regarding the accuracy, completeness, or reliability of the information, and investors must bear risks independently. The views expressed herein are solely the author's personal analysis and do not represent the company's position. Without written authorization, any form of reproduction, modification, or citation is prohibited. For reprinting, please indicate the source as Guotai Junan Futures, ensure the completeness of the content, and refrain from quoting, abridging, or modifying this commentary in ways that distort its original meaning.
Comments