China: Coking coal prices to remain largely stable in 2025

• Domestic output to rise 2%, imports steady y-o-y in 2025

  
  
  

• Prices may decline by $27.5-41.2/t in worst-case scenario

  
  
  

Mysteel Global: China's blast furnace steelmakers and metallurgical coke makers will receive little support from Chinese coking coal prices in 2025, noted Xiong Chao, Mysteel's senior coal analyst, at the company's annual conference in Shanghai on 6 December. Supply is expected to outpace demand next year, and, as a result, prices of the commodity will lack momentum during the year ahead. However, prices will not decline as severely as in 2024.

On the supply side, Xiong predicted that domestic coking coal production this year will dip by about 5% compared with 2023 to around 440 million tonnes (mnt) but will likely rebound by about 2.3% to reach about 450 mnt in 2025.

Coking coal imports this year are expected to rise by around 16% y-o-y to 120 mnt, he said, while forecasting that import levels for the coming year may hold largely steady compared to 2024. Inflows from Russia, a major overseas seller to China, will likely remain at around this year's level rather than increasing hugely.

"Russian coal exports may gain more flexibility in terms of global distribution if the Russia-Ukraine conflict eases somewhat next year," Xiong noted. During this year's January-October period, China's imports of Russian coking coal touched 25.63 mnt, up by 18% compared with the first ten months of last year, according to General Administration of Customs (GACC) data.

Indeed, GACC statistics showed that China's imports of coking coal from all sources hit 99.25 mnt over the first ten months of the year, higher by 23% from the same period last year.

On the demand side, however, Xiong retained a relatively cautious view. While domestic coke makers and steel mills are unlikely to drastically reduce their demand for coking coal next year, it is not expected to see any significant improvement. This could be attributed to their fluctuating demand and financial woes caused by shrinking margins.

Apart from some seasonal slowdowns in steel demand during the Chinese New Year and the National Day week, which will cool the market, most mills will continue to purchase what they consider to be reasonable quantities of raw materials based on their current production needs and profit margins.

Given that supply is expected to still outperform demand next year, China's coking coal market will lack enough upward momentum to drive prices higher in 2025. However, Xiong stated that any declines in coking coal prices would not be as severe as those seen in 2024. Domestic coking coal prices could drop by RMB 200-300/tonne (t) ($27.5-41.2/t) under the worst-case scenario.

Moreover, the domestic coking coal supply structure will continue to show a tightness for primary coking coal, while blending coal remains more sufficient. This imbalance is likely to keep prices of primary coal supported, Xiong added.

Meanwhile, besides observing that domestic prices of thermal coal will provide bottom support for coking coal prices, Xiong was adamant that coking coal prices will not dip below those of thermal coal.

Note: This article has been written in accordance with a content exchange agreement between Mysteel Global and BigMint.