Coal stocks in Hong Kong have experienced another downturn. At the time of writing, YANKUANG ENERGY (01171) was down 3.79% at HKD 14.72, CHINA COAL (01898) fell 2.27% to HKD 12.51, and CHINA SHENHUA (01088) declined 1.38% to HKD 45.88.

The market movement follows a significant sell-off in coking coal and coke futures on Tuesday. The main coking coal futures contract hit the limit-down, plunging 8%, while the primary coke futures contract tumbled 4.50%. This occurred despite the implementation of the sixth round of coke price increases.

Major coke producers had previously issued letters proposing price hikes of RMB 50-55 per tonne. Some Shanxi-based producers increased prices for top-charge dry-quenching coke by RMB 75 per tonne, with the new prices effective from June 8. An analyst noted that while cost pressures for coking coal and coke remain supportive of higher prices, weakening end-user demand is becoming more apparent.

With steel mill profits under pressure and limited room for growth in molten iron output, there is a risk of negative feedback within the industrial chain. Furthermore, high levels of Mongolian coal imports and persistently elevated port inventories are expected to cap the upside potential for coking coal and coke prices in the current cycle. The short-term outlook suggests these commodities may remain strong, but the market carries significant risk for those chasing the rally.