Current Inventory Levels for Coke and Coking Coal

The latest data from Shanghai Metals Market (SMM) reveals significant shifts in coke and coking coal inventory positions across the supply chain. As of June 20, 2025, coke inventories at coking plants have reached 466,000 metric tons, representing a substantial increase of 28,000 mt (6.4%) week-over-week. This upward trend becomes even more pronounced when viewed from a monthly perspective, with inventories climbing by 64,000 mt (20.3%) from the 379,000 mt recorded the previous month.

Conversely, coking coal inventories at these same facilities have fallen to 2.384 million mt, dropping by 67,000 mt (2.7%) compared to the previous week. This decline extends the month-over-month downward trend, with inventories now 70,000 mt (2.1%) below the 3.272 million mt level reported a month earlier.

Steel Mill Inventory Positions

Steel mills are currently holding 2.505 million mt of coke inventory, reflecting a decrease of 35,000 mt (1.4%) week-over-week. The monthly comparison reveals a similar pattern, with inventories falling 58,000 mt (2.3%) from the 2.468 million mt recorded in the previous month.

This consistent reduction in steel mill coke stocks suggests either increased consumption rates or strategic inventory management decisions across the sector. While regional inventory distribution data is not available in the SMM report, these aggregate figures point to potential supply-demand rebalancing throughout the steelmaking value chain.

Port Inventory Dynamics

Port inventories have remained stable at 1.27 million mt, showing no week-over-week change. This stability at major logistics hubs could indicate balanced export-import flows and steady domestic transportation activity.

The unchanged port inventory levels, when contrasted with the fluctuations seen at both production facilities and consumption centers, suggest that the current inventory adjustments are primarily occurring within the domestic production-consumption cycle rather than being driven by international trade war impact.

How Inventory Trends Are Affecting Market Dynamics

The divergent movement between rising coke inventories at production facilities and falling inventories at steel mills creates a complex market dynamic that warrants careful analysis. This 7.8 percentage point spread between producer and consumer inventory trends (coking plants +6.4% vs. steel mills -1.4%) signals a potential market imbalance developing in the supply chain.

Supply-Demand Balance Analysis

The simultaneous rise in finished coke stocks at coking plants alongside declining inventories at steel mills suggests a potential slowdown in steel mill purchasing activity. This pattern could indicate either:

1. Reduced steel production rates causing lower raw material consumption
2. Price negotiation tactics by steel mills creating temporary procurement delays
3. Logistics constraints between coking plants and steel mills limiting material flow

Regardless of the underlying cause, this inventory divergence is likely to influence market leverage in upcoming price negotiations, with coking plants facing increasing pressure to move inventory while steel mills operate with increasingly limited buffer stocks.

Raw Material Supply Chain Pressure Points

Perhaps the most intriguing aspect of the current inventory landscape is the simultaneous decrease in coking coal inventories (-2.7% WoW) at coking plants despite the increase in finished coke stocks (+6.4% WoW). This counterintuitive trend suggests potential operational adjustments or supply constraints within the coking coal procurement chain.

The declining raw material inventories amid rising finished product stocks could indicate:

• Production acceleration to convert existing coking coal into coke before potential supply disruptions
• Raw material procurement challenges limiting coking coal availability
• Strategic hedging against anticipated coking coal price increases

This pattern bears close monitoring, as sustained declines in coking coal inventory could eventually constrain coke production, reversing the current buildup of finished coke stocks.

Production Rate Indicators

Current inventory positions provide valuable insights into operational dynamics across the coke and steel production chain. The accelerating buildup of coke at coking plants (+20.3% MoM) suggests production rates are outpacing immediate demand, potentially leading to inventory optimization measures in the near term.

For steel producers, the gradual reduction in coke inventories (-2.3% MoM) indicates either:

• Steady consumption without corresponding replenishment
• Deliberate inventory drawdown to optimize working capital
• Confidence in future procurement at potentially lower prices

These inventory-based production indicators will likely influence capacity utilization decisions throughout the supply chain in coming weeks. Furthermore, they signal potential shifts in iron ore trends as the entire steel value chain experiences these inventory fluctuations.

Key Market Indicators for Industry Participants

Inventory levels serve as critical barometers of market conditions, providing valuable forward indicators for price movements, seasonal patterns, and regional disparities. Current inventory positions offer several actionable insights for market participants navigating this complex landscape.

Price Movement Correlation with Inventory Levels

Historical market patterns suggest the current inventory divergence – rising coke stocks at producers and falling inventories at consumers – could create opposing price pressures in the near term. While the 6.4% weekly increase in coking plant inventories would typically exert downward price pressure, the 1.4% reduction in steel mill inventories creates counterbalancing upward pressure.

Key price indicators to monitor include:

• Producer price flexibility as coking plant inventories continue to build
• Steel mill purchasing urgency as buffer stocks approach critical levels
• Regional price disparities based on localized inventory positions

The price resolution of these opposing inventory pressures will likely depend on broader steel demand trends and production rate decisions across the sector. This situation contributes to ongoing commodity market volatility affecting numerous industrial sectors.

Seasonal Factors Influencing Current Inventory Positions

Mid-year inventory positions often reflect strategic preparation for third-quarter production patterns. The current 20.3% month-over-month increase in coke inventories at coking plants exceeds typical seasonal patterns, suggesting either:

• Anticipatory stockbuilding ahead of potential Q3 demand increases
• Production optimization to capitalize on favorable input costs
• Strategic positioning ahead of potential market shifts

Steel mills' declining inventories (-2.3% MoM) during this period diverge from typical mid-year preparation patterns, potentially indicating confidence in ongoing procurement flexibility or temporary procurement strategy adjustments.

Regional Inventory Disparities

While the SMM report does not provide regional breakdown, inventory positions likely vary significantly across China's diverse steelmaking regions. The static port inventory level of 1.27 million mt suggests balanced distribution channels nationally, but regional imbalances may still exist between major production hubs like Hebei and consumption centers in eastern coastal provinces.

These regional disparities often create:

• Arbitrage opportunities between low and high-inventory regions
• Localized price variations reflecting regional supply-demand balances
• Transportation optimization needs to rebalance inventories efficiently

Market participants with visibility into regional inventory distributions gain significant strategic advantages in this environment, especially as mining industry evolution continues to transform how resources are extracted and distributed.

Strategic Implications for Market Participants

The current inventory landscape creates distinct strategic imperatives for different stakeholders across the coke and steel value chain. Market participants must develop targeted approaches based on their position within this ecosystem.

Steel Producer Strategies

For steel producers, the 1.4% weekly reduction in coke inventories necessitates careful inventory management to balance operational security with capital efficiency. Key strategic considerations include:

• Procurement timing optimization to capitalize on potential price adjustments resulting from rising coking plant inventories
• Inventory buffer adequacy evaluation as stocks continue their 2.3% monthly decline
• Supplier negotiation leverage assessment given the divergent inventory trends

Steel producers maintaining diverse supplier relationships will gain flexibility in this environment, potentially capitalizing on inventory-driven pricing disparities across regions.

Coking Plant Operational Decisions

Coking plants face more immediate pressure from their accelerating inventory buildup (+6.4% WoW, +20.3% MoM). Strategic priorities likely include:

• Production rate adjustments to align with actual demand patterns
• Raw material procurement optimization given the 2.7% weekly decline in coking coal stocks
• Price flexibility assessment to maintain movement of finished coke inventory
• Regional market targeting to identify higher-demand areas

The simultaneous increase in finished product inventory and decrease in raw material stocks creates a complex operational challenge requiring careful production scheduling and raw material management. Many facilities are beginning to implement data-driven mining operations to better manage these complex supply chain dynamics.

Trading and Logistics Considerations

For traders and logistics providers, the current inventory landscape creates both challenges and opportunities. Key strategic focuses include:

• Arbitrage identification between regions with inventory disparities
• Transportation efficiency optimization to support inventory rebalancing
• Storage capacity utilization as producers seek additional inventory solutions
• Forward positioning based on inventory trend projections

The static port inventory level of 1.27 million mt suggests balanced export/import activities, but domestic redistribution needs may increase if current inventory trends continue.

FAQ About Coke and Coking Coal Inventories

What is causing the divergence between coke and coking coal inventory trends?

The simultaneous increase in coke inventories (+6.4% WoW) and decrease in coking coal inventories (-2.7% WoW) at coking plants suggests a complex operational dynamic. This pattern likely indicates accelerated production converting raw materials into finished products, potentially driven by:

• Anticipated coking coal supply constraints prompting increased conversion rates
• Production optimization to capitalize on favorable margin conditions
• Strategic inventory positioning ahead of expected market shifts

This divergence warrants close monitoring, as sustained reduction in coking coal inventories could eventually constrain the very production that is currently building coke inventories.

How do current inventory levels compare to historical averages?

While comprehensive historical benchmarking requires additional data beyond the SMM report, the 20.3% month-over-month increase in coke inventories at coking plants represents a significant deviation from typical patterns. This substantial inventory build suggests extraordinary market conditions rather than seasonal norms.

For proper contextualization, current inventory levels should be evaluated against:

• Five-year June averages to assess seasonal normality
• Post-pandemic recovery patterns to identify potential cyclical factors
• Pre/post environmental policy implementation periods to measure regulatory impacts

What are the implications of unchanged port inventories?

The static port inventory level of 1.27 million mt indicates balanced export/import activities and domestic transportation flows. This stability at major logistics hubs suggests:

• Equilibrium between production and consumption in coastal regions
• Steady international trade flows without significant disruptions
• Efficient domestic redistribution channels maintaining balance

This port inventory stability amid fluctuating producer and consumer inventories suggests the current inventory adjustments are primarily occurring within the domestic production-consumption cycle rather than being driven by international market dynamics.

How might these inventory trends impact pricing in coming weeks?

The combination of rising producer inventories (+6.4% WoW at coking plants) and falling consumer inventories (-1.4% WoW at steel mills) creates opposing price pressures that will likely be resolved based on:

1. Steel production rate decisions – maintained or increased rates would support price stability
2. Coking plant production adjustments – potential output reductions to prevent further inventory buildup
3. Raw material procurement patterns – coking coal buying activity given declining inventories
4. Regional demand variations – potential targeted price adjustments in high-demand regions

The price impact of these inventory positions will become clearer as market participants reveal their strategic responses to these emerging trends.

Market Outlook Based on Current Inventory Positions

Current inventory positions provide valuable forward indicators for market participants across various time horizons. These data points, combined with broader market context, inform strategic planning across the coke and steel value chain.

Short-Term Market Projections (1-4 Weeks)

In the immediate term, several inventory-driven adjustments appear likely:

• Coking plant output moderation to address the 6.4% weekly inventory increase
• Steel mill procurement acceleration if the 1.4% weekly inventory decline continues
• Regional price differentiation based on localized inventory imbalances
• Coking coal procurement urgency given the 2.7% weekly inventory decline

Critical inventory thresholds to monitor include steel mill inventories approaching minimum operational requirements (typically 7-10 days of consumption) and coking coal inventories at plants falling below production security levels (varies by facility size).

Medium-Term Strategic Considerations (1-3 Months)

Looking ahead to Q3 2025, current inventory positions suggest several strategic imperatives:

• Inventory normalization efforts by coking plants to reduce the 20.3% monthly buildup
• Raw material security enhancement given the 2.1% monthly decline in coking coal stocks
• Production scheduling optimization to align with evolving demand patterns
• Working capital management across the value chain as inventory positions shift

Market participants should develop scenario-based strategies accounting for potential acceleration or reversal of current inventory trends based on broader economic conditions.

Industry-Wide Implications

The current inventory landscape carries broader implications for the steel sector:

• Margin pressure distribution between coking plants (inventory buildup) and steel mills (potential procurement urgency)
• Production capacity utilization decisions influenced by inventory positions throughout the value chain
• International trade flow adjustments if domestic rebalancing proves insufficient
• Potential policy responses if inventory imbalances create market disruptions

Disclaimer: This analysis is based on current inventory data and market conditions. Actual outcomes may vary based on broader economic factors, policy changes, and strategic decisions by major market participants. All projections should be considered scenarios rather than predictions.

The evolving inventory landscape demands ongoing monitoring and agile strategic responses from all market participants. Current positions suggest an industry in transition, with inventory adjustments likely to continue across the supply chain as market participants optimize their positions based on emerging demand patterns and price signals.

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