CONF: China coking coal prices to stay generally stable in 2025

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

Regarding coking coal imports, these for this year is expected to rise by around 16% on year to 120 million tonnes, he said, while forecasting that import levels for the coming year may hold largely steady compared to this year. Coking coal 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 reached 25.63 million tonnes, up by 18% compared with the first ten months of last year, according to General Administration of Customs (GACC) data.

Indeed, GACC statistics show that showed that China's imports of coking coal from all sources hit 99.25 million tonnes 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, their demand is not expected to see any significant improvement either due to their financial woes caused by shrinking margins and fluctuating demand, he suggested.

Apart from some seasonal slowdowns in steel demand during the usual low seasons such as during Chinese New Year and the National Day week that will cool the market, most steel 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 believed that any declines in coking coal prices will not be as severe as those seen in 2024. Domestic coking coal prices could drop by Yuan 200-300/tonne ($27.5-41.2/t) under the worst-case scenario, he said.

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.

Written by Winnie Han, hanyueran@mysteel.com

Edited by Russ McCulloch, russ.mcculloch@mysteel.com