The in-depth analysis of the coal industry has been on hold due to holidays. Today we are updating with the third article, discussing coking coal and coke.
In the coal-coke-steel industrial chain, upstream raw materials often have stronger bargaining power due to higher concentration. In the steelmaking process, iron ore, coking coal, and coke are all raw materials for producing steel. In terms of industry concentration, upstream iron ore mainly relies on imports, with 40% of global production controlled by four major iron ore giants. The concentration of raw coal is also relatively high, reaching 48% in 2021. The downstream steel industry also shows good concentration, with a crude steel production concentration of 38% among steel companies in 2021.
Only coke enterprises have weaker concentration, with only 9%, making them the weakest in bargaining power across the entire industrial chain. However, the intermediate product, coking coal, has stronger concentration than coke, exceeding 40%. During the price reduction from May to August, the price drop was smallest for coking coal < steel < coke. The profit distribution also reflects that coking coal has stronger influence in the industrial chain. Additionally, the current supply of coking coal is tight, with inventory at a low level.
Compared with thermal coal, our country's coking coal relies more on imports, with import dependence remaining above 10% since 2016. This is determined by factors such as resource endowment and mining safety. Of this over 10% import volume, Australian coking coal has consistently held a pivotal position, maintaining a share of around 40-50% since 2013. Therefore, after Australian coal imports were restricted, it had a significant impact on coking coal supply...