Shanxi Supply Continues to Tighten, Coking Coal Futures Rise 15% This Week to Over One-Year High
Nashnova编辑部
Coking coal futures surged 15% this week to their highest since October 2024; safety inspections in Shanxi — which accounts for half of China's coking coal output — have idled massive capacity, and the supply gap may last through year-end.
What triggered this spike?
The benchmark coking coal contract on the Dalian Commodity Exchange hit a high of 1,583.50 yuan per tonne, a level not seen in over a year.
The trigger: China's worst coal mine accident since 2009 in late May, which set off nationwide safety inspections.
This means → the rally is not demand-driven. Supply was forcibly cut by regulators, and the price is moving entirely on the size of that gap.
How much capacity is still offline?
At peak, inspections halted over 130 million tonnes of annual capacity; 50–60 million tonnes remain shut today.
In plain terms = roughly 10% of China's domestic coking coal supply has vanished, and Shanxi alone accounts for half of the country's total output.
CRU Group analyst Banmeet Khurmi warned the market fears this severe shortage could last through year-end.
Is the damage confined to coking coal?
Total coal output across all categories fell 10% year-on-year in July to about 343 million tonnes, near a five-year low.
This reflects a spillover from coking coal into the broader coal sector — July is peak summer electricity season, and thermal coal benchmark prices are already up 4% this month.
Morgan Stanley noted another accident at a thermal coal mine in Hunan last week, suggesting the regulatory tightening is far from over.
Can imports fill the gap?
China relies heavily on Mongolia, Russia, and Australia for coking coal. June imports jumped 34% year-on-year.
Morgan Stanley analysts expect strong arrivals to continue, even as steel output enters a seasonal dip.
This means → higher domestic prices pull in more imports, but that same import surge squeezes steel mill margins already under pressure from weak demand.
What is the key variable from here?
One factor dominates: when the safety inspections end and how fast idled capacity restarts.
If inspections run through year-end, the supply gap cannot narrow and coking coal prices stay elevated.
In plain terms = the price outlook does not hinge on market supply-and-demand forces — it hinges on an administrative decision: when regulators let the mines reopen.
Content is for reference only, not financial advice.