Coking Coal Jumps Over 6% as Rate Cuts Lift Gold to New Highs

During the week of September 15 to 19, the US Federal Reserve's rate cut was implemented and international gold prices hit a new record high. Domestic commodities showed mixed performance: the energy and chemicals sector diverged internally, the ferrous sector was strong, base metals moved in different directions, most agricultural products declined, and the shipping sector's containerized Europe route fell sharply.

In the domestic futures market specifically: in the energy and chemicals sector, fuel oil fell 0.61% for the week, crude oil rose 2.16% and lithium carbonate rose 3.93%; in the ferrous sector, coke rose 6.95%, coking coal rose 7.65% and iron ore rose 1.24%; in base metals, Shanghai silver fell 0.89%, Shanghai copper fell 1.42% and Shanghai lead rose 0.65%; in agricultural products, hogs fell 3.24%, soybean meal fell 2.11% and palm oil rose 0.22%; in shipping, the containerized Europe route fell 9.25%.

Trading market highlights

Highlight one: coking coal and coke lead the ferrous sector, driven by both a tight supply-demand balance and policy expectations

Last week, the main contracts of both coking coal and coke posted two consecutive sessions of gains, with weekly increases of more than 6%, making them the core varieties driving the domestic futures market.

On the supply side, suspended coal mines resumed production one after another, but the Central Ecological and Environmental Protection Inspection required Shanxi to “strictly implement total coal output control”, and combined with the suspension of some mines, the rebound in coal mine output was limited, further reinforcing expectations of production cuts in the second half of the year. According to Mysteel data, the operating rate of 523 sample mines producing washed coking coal rose 1.94 percentage points week on week to 84.65%, and average daily washed coal output increased by 32,500 tonnes to 760,900 tonnes; the operating rate of 314 sample coal washing plants rose 2.02 percentage points to 37.44%, and average daily washed coal output increased by 11,900 tonnes to 268,000 tonnes. Although there was a slight rebound, overall supply flexibility remained limited under policy constraints. In addition, Mongolian coal imports remained high, with weekly customs clearance at the Ganqimaodu port reaching 1.0642 million tonnes, partly offsetting the insufficient increase in domestic supply. Mongolian coal cleared through Ganqimaodu totaled 1.0642 million tonnes for the week, offsetting part of the increment.

Coke output overall remained stable: the capacity utilization rate of all sample independent coking enterprises fell 0.05 percentage points week on week to 75.87%, and average daily metallurgical coke output edged down 0.04 million tonnes to 667,200 tonnes; the coke capacity utilization rate of 247 steel enterprises rose 0.1 percentage points to 86.03%, and average daily output increased 0.05 million tonnes to 466,500 tonnes. On the price side, after the second round of coke price cuts was implemented, the average profit per tonne of coke at independent coking plants turned from positive to negative, with an average loss of RMB 17 per tonne. However, as coking coal prices recently stabilized, market expectations of further coke price cuts weakened significantly, and price support on the supply side gradually emerged.

On the demand side, production at downstream steel mills recovered rapidly, with average daily hot metal output rising 0.47 million tonnes week on week to 2.4102 million tonnes, remaining at a high level and directly driving coke demand — China's coke consumption rose 0.21 million tonnes week on week to 1.0846 million tonnes for the full week. The demand base remained solid, with no significant seasonal decline.

In addition, with the National Day holiday approaching, downstream restocking gradually got under way, but enthusiasm diverged: independent coking plants restocked more aggressively, with coking coal inventories at all sample independent coking enterprises rising 588,700 tonnes week on week to 9.4041 million tonnes, and days of inventory up 0.65 days to 10.6 days, ending the previous six-week destocking trend; steel mills focused on “just-in-time procurement”, with coking coal inventories falling 33,900 tonnes week on week to 7.9034 million tonnes, while only coke inventories were replenished by 113,800 tonnes to 6.4467 million tonnes, reflecting steel mills' caution toward high raw material prices.

On the inventory side, destocking of coking coal upstream slowed: the 523 mines destocked 217,300 tonnes, while washing plants and ports built inventories by 237,700 tonnes and 110,800 tonnes respectively, leaving overall pressure modest. Downstream, independent coking plants destocked 14,300 tonnes of coke to 664,100 tonnes, and after steel mills replenished coke, days of inventory rose 0.13 days to 11.42 days, improving the inventory structure.

Yu Dian, a researcher at CITIC Futures, believes that although coking coal supply has rebounded, it has not returned to pre-Safety Month levels; on the demand side, coke output is temporarily stable, and pre-holiday restocking by coking plants pushed mines to destock slightly. Rising “anti-involution” sentiment at home combined with the Fed's rate cut as expected, and supported by peak-season restocking demand, gains in the futures market drove a rebound in spot prices.

Heng Feichi, an analyst at AVIC Futures, said that the two coking coal contracts strengthened overall this week, dipping only briefly midweek on the Fed's policy meeting before recovering the losses on Friday. Coal mines are gradually resuming production, but environmental production controls and the suspension of some mines in Shanxi are constraining the supply recovery, and production cut expectations remain strong; on the demand side, hot metal output has rebounded rapidly, downstream restocking began before National Day, inventory pressure has eased, and a bullish fundamental picture combined with “anti-involution” policy expectations is supporting coking coal.

Yang Hui, a ferrous analyst at Zhengxin Futures, noted that although this round of coking coal gains was driven by “anti-involution”, the strength of policy expectations, the commodity sentiment, valuation sentiment and fundamentals are all weaker than in July and August, and the rally has slowed. In the short term, restocking expectations before the two holidays will keep the futures market firm with limited pullbacks; after the holiday, once restocking ends, prices may come under pressure and decline, though the fourth quarter can still be viewed with optimism under the support of “anti-involution” policy.

Highlight two: international gold rises on the resonance of macro factors and supply-demand conditions

International gold prices have recently continued to break historic highs. COMEX gold futures touched US$3,744.0/oz intraday on September 17, London spot gold briefly broke through the US$3,700/oz mark, and the main Shanghai gold contract closed at RMB 826.71/gram over the same period, with cumulative gains of more than 35% this year. This rally has been driven by the resonance of multiple core factors.

The Fed's rate cut is the dominant logic. US nonfarm payrolls added only 22,000 jobs in August, far below the expected 75,000, the unemployment rate rose to 4.3%, and PPI fell 0.1% month on month. The weak economic data led the market to price in a more than 95% probability of a 25bp rate cut in September. The real yield on 10-year US Treasuries fell to 1.73%, greatly reducing the opportunity cost of holding gold, and Trump's pressure for “big rate cuts” further reinforced easing expectations.

Institutions hold strong bullish expectations for the gold price outlook. Goldman Sachs said that if the Fed's independence is undermined, a shift from US Treasury holdings to gold could push gold to US$5,000/oz, with a baseline forecast of US$4,000/oz by mid-2026; Morgan Stanley said it has raised its year-end gold target to US$3,800/oz, stressing that a weaker dollar and falling real interest rates are the core drivers supporting gold prices. Risks should nevertheless be watched: a smaller-than-expected Fed rate cut, a decline in central bank gold purchases, or a technical correction triggered by an overbought RSI could all disrupt the short-term market.

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