Wu Wenzhang: Re‑examining Coke: The Core Driving Role of Coal in the Current Black‑Metal Market Rally

Abstract: In 2026, China’s ferrous‑metal industrial chain has fully entered the “Rust‑Era”. Old market logics featuring traditional cyclical games and seasonal universal gains‑and‑losses have gradually faded out. The industry has stepped into a new stock‑game phase characterized by low‑growth, low‑profit and sharp differentiation.

In August, ferrous futures‑spot markets exhibited extreme structural fragmentation. Core market drivers have shifted: coking coal, instead of steel products, has become the primary trigger and catalyst for the current market recovery, dominating market trends throughout the month. Alongside the roll‑over from the September contract to JM2701, massive capital flowed to forward‑month contracts. The contract switch not only magnified short‑term price volatility but also reset the trading benchmark for the entire ferrous complex. Currently, JM2701 trades at a historically steep discount to Shanxi primary coking coal and Mongolian imported coking coal. Based on historical patterns, multiple paths exist for discount recovery from September to October. The game between tight‑balance spot reality and long‑term easing expectations will constitute the core market theme.

From the raw‑material perspective, January‑August 2026 saw structural divergence for imported iron ore: marginal year‑on‑year drop in RMB‑denominated prices versus year‑on‑year rise in USD‑denominated prices. Coupled with persistently tight coking‑coal supply, sharp rises in coal‑coke costs and steady iron‑ore price rebounds, steel mills faced severe negative margins between production costs and sales proceeds. This forced proactive output cuts and reduced finished‑goods supply, completely reshaping ferrous‑chain supply‑demand balance for September‑October and emerging as the biggest disruptive variable for phased market moves.

Keywords: Rust‑Era; core driving force; pricing anchor; deep discount; cost‑driven output cut; contract roll‑over; supply‑demand structure; structural differentiation; new industrial equilibrium

I. Restructured Underlying Logic of 2026 Ferrous‑Metal Market: Formal Establishment of the New Rust‑Era Equilibrium

2026 marks a pivotal year for cyclical transition within the ferrous‑metal industrial chain. Past operating logics driven by policy stimulus, seasonal swings, inventory speculation and aggregate‑volume games have faded or even failed. The industry has officially entered the “Rust‑Era” featuring consolidation‑driven upgrading, stock‑volume‑oriented quality improvement, structural differentiation and weak equilibrium. The overarching tone for the steel market is structural adjustment, sluggish recovery and fragile equilibrium.

Markets have bid farewell to the foundation for unilateral full‑blown bull or bear cycles. Profitability is determined by structure, prices by supply‑demand fundamentals and corporate earnings by operational capability — these serve as core pricing rules throughout the year and constitute the fundamental industrial logic of the Rust‑Era.

The most transformative change in current markets lies in the thorough reshuffling of market drivers. Under old cycles, end‑use demand from real estate and infrastructure dictated steel pricing; profits cascaded downstream‑to‑upstream toward coke, coking coal and iron ore, with end‑user demand acting as the absolute pricing core. Today, end‑use demand is in a weak‑recovery, stock‑volume‑based phase with sharply diminished demand elasticity. Marginal supply‑side disturbances, cost‑structure shifts and low‑inventory fluctuations have supplanted demand as dominant market drivers. In particular, phased supply‑demand mismatches on the raw‑material side and structural cost inflation for dual raw materials are thoroughly reshaping ferrous‑complex pricing systems and industrial‑chain supply‑demand dynamics.

The defining feature of the Rust‑Era is the end of homogeneous market cycles with universal profit expansion or collapse. The industry maintains overall weak equilibrium with neither systemic oversupply nor persistent supply shortages. Minor supply‑side shifts and marginal raw‑material price swings trigger pronounced futures‑spot volatility, widening gaps between product performance and corporate profitability. Structural market trends have fully replaced aggregate‑volume‑driven cycles.

Reviewing market performance from August through early September, historical inertia for relative strength among ferrous products has been broken. August witnessed the roll‑over of coking‑coal main contract from September to January. Profit‑taking intensified ahead of September‑contract expiry, and massive capital poured into the forward‑month JM2701 contract, amplifying futures volatility. Presently, JM2701 carries a steep dual deep discount to low‑sulfur primary coking coal from Anze (Shanxi Province) and imported Mongolian No.5 coking coal at Shaheyi Port. The historically wide discount reflects fierce confrontation between tight near‑term spot fundamentals and long‑term supply‑security easing expectations.

During this market cycle, coking coal leveraged structural strengths including constrained near‑term supply, low inventories and strong basis to act as the trigger and catalyst for market rallies and serve as the key market barometer. The pullback of JM2701 starting September 1 triggered corrections across the complex, until price stabilization emerged on September 4, completing short‑term sentiment repair.

Structural divergence among raw materials represents a key source of market disturbance for September‑October. SteelHome data shows that for PB iron‑ore fines at Qingdao Port, January‑August 2026 delivered a contradictory performance: RMB‑denominated prices fell 1.8 % YoY while USD‑denominated prices rose 1.6 % YoY. Four underlying factors account for this divergence: incremental supply from global mines capped offshore price gains; year‑to‑date RMB appreciation offset USD‑denominated price hikes; sluggish domestic end‑use demand limited spot rebounds; and long‑term contract negotiation mechanisms smoothed price fluctuations.

Against iron ore’s weak‑equilibrium backdrop, tight supplies of high‑grade coking coal and sharp spot‑price surges have created divergent performance for the two major raw materials and rigid upward pressure on composite costs, thoroughly altering steel‑mill operating logic. Normalized safety supervision in major producing regions will persist through September‑October, keeping tight supplies of premium low‑sulfur primary coking coal. Steel mills generally face insufficient coal‑coke restocking and imbalanced raw‑material blends. Combined with bottoming‑and‑rebounding iron‑ore spot prices, comprehensive production costs keep climbing. Finished‑goods demand remains feeble with limited recovery, aggravating negative production‑sales margins and profit erosion for steel producers.

Cost pressure will trigger a complete industrial‑chain negative‑feedback loop: raw‑material price hikes → severe steel‑mill losses → active reduction in blast‑furnace operating rates → crude‑steel output contraction → reduced finished‑goods supply. This will break the existing “weak equilibrium”, reshape full‑chain supply‑demand relationships for September‑October and function as the most critical market disturbance variable. This operating paradigm of “supply determining volatility and structure determining market trends” perfectly aligns with the new industrial paradigm of the Rust‑Era.

Historical reviews confirm that coking coal has become the barometer and pricing anchor for the current ferrous‑metal market. Its price strength and futures rhythm, compounded by cost‑driven output‑cut logic for dual raw materials, directly dictate overall market trajectories for September‑October. Coking coal leads rallies during upswings and dictates complex performance during corrections. Contract roll‑overs and raw‑material structural shifts amplify short‑term volatility, shifting market focus from near‑term delivery logic toward medium‑term games over Q4 supply‑demand balances and steel‑mill output cuts. Constrained by demand and long‑term easing expectations, steel products, iron ore and coke can only follow passively, highlighting extreme product‑level structural divergence.

Overall forecast: coking‑coal futures are expected to stabilize and rebound next week, consolidating bottoms for the ferrous complex and returning to structural, phased recovery trajectories.

II. Full Review of Ferrous‑Metal Spot Market Performance in August 2026

August 2026 ferrous futures‑spot markets featured strong coal‑coke complex, weak steel products, muted iron‑ore performance, structural fragmentation and cost‑side divergence. Wide disparities existed across products in volatility elasticity, driving forces and price rhythms, validating coking coal’s barometer role, iron ore’s subdued price responsiveness and Rust‑Era differentiation patterns.

Below are tax‑inclusive spot prices for five core SteelHome products (CNY / ton):

1. HRB400E Φ20 rebar (Hangzhou): 3130 (early‑month), 3140 (mid‑month), 3280 (month‑end); range 3130‑3280; monthly price gravity rose 150 CNY/ton. Modest low‑level recovery amid off‑season conditions with limited price elasticity.
2. 5.75 mm Q235B hot‑rolled coil (Hangzhou): 3160 (early‑month), 3300 (mid‑month), 3410 (month‑end); range 3160‑3410. Supported by resilient manufacturing‑sector rigid demand, hot‑rolled coils outperformed long products, and coil‑rebar price spreads widened.
3. Low‑sulfur primary coking coal (ex‑mine, Anze, Shanxi): 2010 (early‑month), 2280 (mid‑month), 2550 (month‑end); cumulative monthly gain 540 CNY/ton. Tightening safety supervision and regular over‑production inspections in major producing regions created shortages of high‑grade coking coal, delivering solid spot‑price support. Information Source: https://www.steelhome.com/detailspage.php?nid=4757297&ntype=n
4. Mongolian No.5 imported primary coking coal (port‑side, Shaheyi): tracked domestic primary coking coal higher. Port‑of‑entry clearance was periodically constrained, tightening deliverable‑grade volumes, maintaining reasonable quality‑based price spreads versus Shanxi low‑sulfur primary coking coal.
5. Shanxi quasi‑first‑grade wet‑quenched metallurgical coke (ex‑mine): 1580 (early‑month), 1530 (mid‑month), 1780 (month‑end). Multiple price hikes fully passed through on the back of rising coking‑coal costs, yet upside was persistently capped by steel‑mill profitability constraints.
6. 62 % PB iron‑ore fines (Qingdao Port): 660 (early‑month), 683‑688 (mid‑month), 695‑700 (month‑end); total monthly volatility merely 40 CNY/ton. Supply‑demand maintained equilibrium with no independent trend drivers; price responsiveness remained muted, showing only low‑level stabilization and slow structural improvement.

(I) Coking Coal: Structurally Tight‑Balance Sets Market Tone, Establishing Core Market Barometer and Pricing‑Anchor Status

August coking‑coal market characteristics: tight physical fundamentals paired with easing long‑term expectations; strength in near‑month contracts versus weakness in forward‑month contracts. Coking coal was the only ferrous‑complex product with independent bullish logic.

On the supply side: regular work‑safety inspections and over‑production audits across major producing regions in Shanxi‑Shaanxi‑Inner Mongolia constrained release rates for compliant capacity. Scarcity intensified for premium low‑sulfur primary coking coal and fat coal. Mine‑site and port deliverable inventories stayed low, providing firm spot‑price underpinnings. Periodically reduced clearance volumes at Mongolian coal border crossings further tightened port‑side Mongolian No.5 deliverable volumes and reinforced spot‑price floors.

On the demand side: independent coking plants and steel mills maintained low overall inventories with smooth spot‑goods circulation. Steady rigid‑demand purchasing continuously supported coal‑price appreciation.

From the futures‑spot structural perspective: August brought the roll‑over from September to January main coking‑coal contract. As the September contract neared expiry, trading focus shifted toward physical delivery and warehouse‑receipt games, with early long positions taking collective profits. Large capital flows migrated to the JM2701 forward‑month contract. Market‑trading logic transitioned from near‑term tight spot‑balance to comprehensive games incorporating long‑term supply‑security releases, higher Mongolian‑coal imports and winter‑stock‑building expectations. This ultimately produced a steep dual deep discount on JM2701 relative to Shanxi primary coking coal and Mongolian coal.

Futures prices fully priced in long‑term easing expectations, yet tight near‑term spot fundamentals remained unrefuted, creating an extremely fragmented market dynamic of “strong reality vs weak expectations”. Every futures correction was underpinned by spot‑market fundamentals, preventing deep declines, and firmly cemented coking coal’s status as trigger, catalyst and pricing anchor for the current cycle. JM2701 led the complex downward on September 1, triggering broad corrections; initial price stabilization occurred on September 4. The magnitude of coking‑coal recovery next week will directly determine market trajectories for the entire ferrous complex.

Historical contract data shows deep discounts during August‑September January‑contract roll‑overs are normal. Nevertheless, discount recovery follows no single‑factor logic; it represents a dynamic process of constant reality‑versus‑expectation games and validations. Combining Rust‑Era industrial patterns and September‑October cost‑driven output‑cut logic, three core paths exist for JM2701 deep‑discount recovery, which may unfold separately or interactively:

Path 1: Sustained spot‑market tightness and invalidation of bearish long‑term expectations; futures rally to narrow basis. If high‑intensity safety supervision persists in major producing regions through September‑October, capacity‑increase releases underperform expectations, and Mongolian‑coal clearance remains sluggish, spot prices for Shanxi primary coking coal and port‑side Mongolian coal stay firm and long‑term easing expectations fail to materialize. JM2701 will rally to compress discounts. This represents the most conventional recovery mode under high‑basis conditions. Preconditions include sustained low full‑chain inventories, timely initiation of winter‑stock‑building and no cliff‑style drop in steel‑mill rigid demand.

Path 2: Spot‑price pull‑back mechanically erases discount spreads. If supply‑security policies are implemented, large‑volume releases of domestic high‑grade coal materialize, Mongolian‑coal border‑crossing volumes surge, peak‑season demand underperforms projections, widening steel‑mill losses trigger collective maintenance shutdowns and crude‑steel output drops sharply. Coking‑coal rigid demand weakens and spot prices converge downward toward JM2701 futures levels to realize discount contraction. This represents the core bearish‑side trading thesis; primary risk window falls in mid‑to‑late October, highly correlated with cost‑driven output‑cut rhythms.

Path 3: Mutual convergence of futures and spot prices with gradual discount narrowing (baseline scenario). This is the highest‑probability operating mode within the Rust‑Era. No extreme supply‑demand events are expected for September‑October. Near‑term spot prices retain resilience while facing late‑peak‑season correction pressure. Supported by its deep‑discount buffer, JM2701 edges upward amid oscillations; futures‑spot prices converge bilaterally without full one‑time discount elimination. Reasonable delivery‑oriented spreads persist approaching expiry, consistent with historical contract‑performance patterns.

Important reminder: Following implementation of new delivery standards, warehouse‑receipt costs have shifted upward, resetting JM2701’s reasonable discount mid‑point. Simple comparisons against historical basis values of old‑generation contracts are no longer valid. Going forward, closely monitor two sets of price spreads: JM2701 versus ex‑mine low‑sulfur primary coking coal (Anze, Shanxi), and JM2701 versus port‑side Mongolian No.5 spot coal (Shaheyi). Discount‑recovery paths can be validated via spread evolution; combined with steel‑mill output‑cut rhythms, overall ferrous‑complex trends can be accurately assessed.

(II) Coke: Passively Driven by Costs, Limited Upside, Pronounced Passive‑following Attributes

August coke lacked independent pricing power; its market performance was entirely governed by coking‑coal‑cost dynamics. Surging upstream coking‑coal prices lifted coking‑plant production costs. Coupled with low coking‑plant inventories, smooth product offtake and strong price‑defending willingness, four rounds of cumulative price hikes totaling 350 CNY/ton were fully executed.

Nevertheless, rigid upper limits constrained coke appreciation. August fell within steel’s traditional off‑season; steel‑mill profitability kept deteriorating. Compound cost inflation for dual raw materials further exacerbated negative production‑sales margins. Steel‑mills’ tolerance for raw‑material price increases declined, directly slowing coke‑hike implementation and compressing upside amplitude. Overall performance featured “cost‑supported floors, capped upside and passive volatility”.

(III) Steel Products: Weak Off‑Season Demand, Cost‑Supported Floors, Structural Differentiation, Output‑Cut Preparation

August steel consumption fell within the seasonal off‑season. End‑use demand stayed muted, rendering steel products the relative weak link within the ferrous complex.

Demand‑side: new‑starts and construction activity in real estate remained subdued, weighing on long‑product demand; infrastructure delivered floor‑support without incremental growth. Rigid manufacturing‑sector demand in new‑energy industries, high‑end equipment and offshore engineering maintained resilience, delivering structural demand backing.

Supply‑side: cost pressures from spiking coal‑coke prices and steadily rising iron‑ore prices eroded steel‑mill profits. Market‑driven maintenance and flexible‑output‑control measures were implemented in advance, bringing marginal crude‑steel‑supply contraction and underpinning steel‑price floors, pre‑emptively realizing core cost‑driven‑output‑cut logic for September‑October.

Overall, August steel products possessed no intrinsic bullish momentum. Price recovery entirely depended on coal‑coke‑cost sentiment and supply‑contraction expectations. Product‑level differentiation solidified further: industrial‑grade hot‑rolled coils consistently outperformed construction‑oriented rebar, perfectly reflecting the Rust‑Era structural pattern: “strong sheets, weak construction steel, superior specialty steel”.

(IV) Iron Ore: Balanced Supply‑Demand, Structural Divergence, Muted Price Elasticity, Passive Trend‑Following

No major marginal shifts occurred on iron‑ore supply‑demand sides in August; overall equilibrium prevailed. Persistent domestic‑overseas price divergence persisted with no independent trend drivers. Iron‑ore prices passively tracked sentiment swings in coal‑coke and steel markets throughout the period.

Supply‑side: core logic sustaining January‑August domestic‑offshore price divergence remained intact: incremental supply from overseas mines capped offshore gains; RMB appreciation offset USD‑denominated price increases; feeble domestic end‑use demand limited spot rebounds; long‑term contract mechanisms smoothed price volatility. This produced a structural “strong offshore, weak domestic” market outcome.

Demand‑side: steel mills maintained low‑inventory, procurement‑on‑demand strategies with no large‑scale restocking. Blast‑furnace operating rates fluctuated moderately, delivering modest rigid‑demand support. Iron‑ore price responsiveness remained muted, confined to low‑range narrow oscillations with slow upward drift. Entering September‑October, steadily climbing iron‑ore prices will further raise steel‑mill cost burdens and accelerate materialization of output‑cut logic.

III. Core Market Logic of the Rust‑Era: Analysis of Definitive Upside Dividends and Key Risks

Market‑game logic for September‑October 2026 ferrous‑metal markets is well‑defined: risks define upper‑price boundaries; dividends define price floors; costs shape supply rhythms. Large‑scale systemic unilateral cycles are unlikely. Core opportunities lie in valuation‑repair trades and structural, phased market moves. Chain‑reaction‑style output cuts triggered by dual‑raw‑material‑cost pressures constitute the sole major new variable for this period.

(I) Three Core Risks Capping Market Upside

1. Risk of under‑expectation real‑estate recovery. The real‑estate sector has entered a long‑term volume‑reduction cycle. No fundamental recovery exists for new‑starts, construction‑in‑progress or project completions. Weak steel consumption within real‑estate‑linked industries will persist, suppressing profit‑recovery potential for construction‑grade steel.
2. Risk of capacity‑driven price‑war rebounds for commodity‑grade steel. Fundamental oversupply persists for ordinary long products. Once steel prices achieve phased recovery, low‑efficiency capacities tend to resume production, intensifying industry‑wide price competition, disturbing supply‑demand equilibrium and hindering profit recovery for commodity steel grades.
3. Risk of under‑expectation exports for high‑end steel grades. Mounting overseas trade barriers create export uncertainties for sheets and high‑quality specialty steel. Weaker export performance would directly erode demand resilience for industrial‑ and specialty‑steel products and compress structural‑premium margins.

(II) Five Definitive Dividends Underpinning Market Floors

1. Dividend from product‑mix upgrading. Against peak‑aggregate‑output conditions, steel mills accelerate transitions: “long‑products‑to‑sheets, commodity‑grade‑to‑high‑grade, high‑grade‑to‑specialty‑grade”. Steel demand tied to new‑energy and high‑end‑equipment sectors keeps growing, amplifying structural premiums for premium‑grade products.
2. Dividend from market‑driven capacity iteration. Administrative output‑restraint measures are gradually phased out. Cost‑driven market‑oriented output cuts and low‑efficiency‑capacity adjustments become normalized. Weak supply‑demand equilibrium continuously improves, alleviating price‑competition pressure from low‑end capacity. This logic will materialize prominently in September‑October.
3. Dividend from coal‑coke‑cost support. Systemically elevated coal‑coke price centers consolidate price floors. Combined with gradual overseas‑iron‑ore‑price appreciation, cost baselines for the entire industrial chain rise, drastically limiting downside potential for steel‑ and iron‑ore prices and driving valuation recovery across the complex.
4. Dividend from rigid demand in emerging industries. Steel consumption for wind power, photovoltaic, energy storage, offshore‑engineering and new‑energy‑vehicle sectors expands steadily, representing one of the few definitive demand‑growth drivers for steel and sustaining resilience for industrial‑product prices.
5. Dividend from rising industrial concentration. Top‑tier compliant enterprises meeting ultra‑low‑emission standards continuously capture market share. Resources, order books and profits concentrate toward leading participants, optimizing overall industrial‑chain operating order.

IV. In‑Depth Deduction of September‑October Futures‑Spot Performance for Ferrous‑Metal Products

Drawing on August‑early‑September futures‑price movements, Rust‑Era industrial logic, marginal supply‑demand shifts, field‑survey data and historical analogies, systematic market projections are developed for the four major ferrous‑metal products for September‑October. Overall judgment: markets maintain the pattern of “strong raw materials, weak end‑use demand, structure‑driven opportunities and moderate recovery”. No systemic unilateral rallies or collapses are anticipated. Coking coal, as core barometer and pricing anchor, dictates complex direction; cost‑triggered output cuts function as the key disruptive variable. Disturbances stemming from roll‑over‑related capital flows will gradually fade. The strength of coking‑coal stabilization and recovery next week will determine the market turning point for the whole complex.

(I) Coking Coal: Solidified Pricing Anchor, Near‑Term Strength vs Forward‑Month Weakness, Oscillating‑to‑Bullish; Discount Games Persist Through September‑October

September‑October coking‑coal markets retain the structural feature of “tight near‑term fundamentals, easing long‑term outlook”. Completion of roll‑over from September contract to JM2701 fully shifts futures‑trading focus toward forward‑month‑based logic, and coking coal continues to serve as the primary barometer for the ferrous complex. Prices trend broadly upward amid oscillations with solid bottoms, though downstream‑cost constraints cap large‑scale unilateral rallies.

Supply‑side: high‑intensity safety‑ and environmental‑protection supervision prevails across major producing regions ahead of National Day holidays. Regular oversight over coal‑mine over‑production restrains rapid release of effective primary‑coking‑coal supply. Mine‑site and port inventories remain low, supporting spot‑price resilience. Mongolian‑coal‑cross‑border‑clearance volumes carry phased uncertainties, directly impacting port‑side spot prices and futures‑spot spreads. Supply‑security policies progressively take effect in October; capacity‑increase approvals and import‑volume growth materialize, and long‑term easing expectations persist in weighing on forward‑month prices, sustaining the “strong near‑month, weak forward‑month” configuration.

Demand‑side: traditional peak‑season conditions arrive in September; coking‑plant operating rates improve marginally and rigid demand rises steadily. In October, markets pre‑emptively price winter‑stock‑building activity; willingness‑to‑stockpile rises among traders and coking plants, further consolidating spot‑price floors. Nevertheless, weak recovery for end‑use steel‑product demand and rising iron‑ore costs render steel‑mill‑loss mitigation difficult. Should peak‑season demand underperform expectations, steel mills will proactively reduce output and pass pressures upstream, coking‑coal upside will be capped.

Futures‑spot dimension: JM2701’s deep discount constitutes the core trading contradiction for September‑October. Alternating games unfold across the three discount‑recovery paths. News‑driven price spikes may occur, yet prices remain anchored to spot‑fundamental realities and output‑cut dynamics. Market performance centers on structural recovery underpinned by tight‑balance physical markets while long‑term expectations constrain upside; choppy upward oscillations represent the dominant operating pattern.

Key tracking indicators: two sets of spot‑price spreads for JM2701 versus Shanxi primary coking coal and Mongolian coal; steel‑mill operating rates; crude‑steel output volumes; winter‑stock‑building progress.

(II) Coke: Robust Cost‑Based Support, Compressed Upside Magnitude, Postponed Negative‑Feedback Risks

September‑October coke prices are fully anchored to coking‑coal costs. Markets trend moderately bullish amid oscillations, yet price‑hike amplitude is visibly narrower versus August. Passive‑following characteristics outweigh independent drivers; high‑level volatility intensifies. Upside boundaries are entirely determined by steel‑mills’ cost‑bearing capacity.

Support factors: persistently high coking‑coal prices form solid cost floors. Coking‑plant inventories are low, spot‑goods circulation is smooth and price‑defending sentiment remains strong, eliminating deep‑decline potential for coke. Steel‑Home field surveys show extreme divergence in coke inventories across domestic steel mills: certain North‑China steel mills hold merely 1‑2.5 days of coke inventory, with widespread material shortages and premium‑price restocking. Coupled with pre‑Mid‑Autumn‑and‑National‑Day‑holiday stocking demand, spot‑price support is robust through early‑to‑mid‑September. Pre‑emptive winter‑stock‑building expectations for October also underpin prices.

Pressure factors: feeble peak‑season steel‑product recovery and rising iron‑ore prices hinder steel‑mill‑profit improvement. Steel‑mills’ tolerance for raw‑material price hikes keeps diminishing, raising resistance to subsequent coke‑price‑hike implementation and intensifying market games. Moreover, recovering coking‑plant profitability will lift operating rates, generating marginal coke‑supply growth and further compressing upside scope.

Large‑scale industry‑wide output cuts have not yet materialized in the steel sector, yet cost pressures keep accumulating. Probability rises for negative‑feedback events from late‑September through October. Market consensus is clear: scale and timing of blast‑furnace maintenance and production curtailments constitute key turning‑point indicators for coke markets; price‑rally ceilings correspond to steel‑mills’ ultimate cost‑bearing limits. Mid‑to‑late October represents the primary risk window for concentrated negative‑feedback events triggered by output cuts.

Overall, coke markets sit amid dual‑sided games between cost support and demand constraints, with no basis for unilateral price cycles. Futures‑spot gravity edges upward with repeated high‑level oscillations. Performance is highly correlated with coking‑coal, iron‑ore and steel‑mill‑output‑cut rhythms.

(III) Steel Products: Output‑Cut‑Supported Floors, Low‑Level Recovery, Extreme Differentiation, Structure‑Oriented Markets

The traditional “Golden‑September‑Silver‑October” peak‑season unfolds for September‑October. However, within the Rust‑Era, universal broad‑‑based rallies will not occur. Core logic features market‑driven output‑cut support, peak‑season rigid‑demand recovery and extreme product‑level differentiation.

Supply‑side: compound cost inflation for dual raw‑materials creates severe negative production‑sales margins for steel mills. Loss‑driven market‑oriented maintenance and flexible‑output‑reduction practices spread progressively. While industry‑wide large‑scale output cuts are absent, localized load reductions and maintenance shutdowns have already occurred. Most steel mills explicitly state that sustained losses will trigger further crude‑steel‑output curtailments. Such profit‑driven market‑oriented supply‑contraction thoroughly reshapes September‑October steel‑product supply‑demand balances and serves as the most important market support.

Demand‑side: construction‑site restarts in northern China and accelerated infrastructure investment deliver marginal end‑use‑demand improvement in September; inventories enter regular draw‑down cycles. Construction‑sector‑oriented long‑product demand gradually weakens in October as northern‑region construction‑season winds down. Real‑estate‑sector weakness persists; construction‑steel grades achieve only modest recovery with no explosive‑demand growth. Manufacturing‑sector rigid‑demand remains steady; steel‑product demand for new‑energy and high‑end‑equipment sectors stays buoyant, sustaining resilience for industrial‑grade steel.

Product‑level differentiation widens: weighed down by real‑estate headwinds and capacity‑driven price competition, recovery scope for commodity‑grade products such as rebar and wire rod is limited. Supported by manufacturing‑sector rigid‑demand, hot‑rolled coils, heavy plates and high‑quality specialty steel maintain stable production scheduling and superior resilience. Coil‑rebar and commodity‑to‑specialty‑steel price spreads stay elevated.

Comprehensive assessment: steel‑product floors are solid for September‑October with minimal deep‑decline risk. Valuation recovery is achieved via output‑cut dynamics and peak‑season rigid‑demand. Nevertheless, real‑estate‑sector weakness and capacity‑driven price competition cap upside potential. Market characteristics include valuation repair, low‑range oscillations, upward‑drifting price gravity, structural differentiation and supply‑driven price action. September witnesses accumulation‑phase recovery; October sees concentrated materialization of output‑cut‑driven market moves.

(IV) Iron Ore: Stable Oscillations, Passive Correlation, Sustained Steel‑Mill‑Cost Inflation

No disruptive shifts occur within September‑October iron‑ore supply‑demand fundamentals; overall equilibrium persists. Domestic‑offshore structural price divergence continues, with no independent trend drivers. Iron‑ore prices passively track coal‑coke‑and‑steel‑product volatility throughout the period. Its primary role is continuously lifting steel‑mill comprehensive costs and facilitating materialization of output‑cut logic.

Supply‑side: shipment‑and‑arrival volumes from major overseas mines remain stable; incremental volumes from minor‑supplier mines are limited. Port inventories stay within neutral reasonable ranges without notable marginal disturbances.

Demand‑side: steel‑mills’ low‑inventory‑based‑procurement‑on‑demand pattern persists; no large‑scale restocking cycles emerge. Higher dual‑raw‑material costs and worsening steel‑mill‑losses expand maintenance‑shutdown scope, constraining hot‑metal output and indirectly weighing on iron‑ore demand. Should blast‑furnace‑output‑cut scope expand in October, iron‑ore rigid‑demand will deteriorate further.

Overall, large‑scale rallies or collapses for iron ore are unlikely. September‑October performance features low‑amplitude narrow‑range oscillations with slowly rising price gravity. Iron ore continuously provides cost‑side support for industrial‑chain‑output‑cut logic and, together with coal‑coke, reshapes ferrous‑complex supply‑demand balances.

V. Comprehensive Logic Summary and Market Re‑Assessment for September‑October Ferrous‑Metal Markets

Reviewing full‑industrial‑chain dynamics, September‑October 2026 ferrous‑metal markets will fully embody core Rust‑Era attributes: no aggregate‑volume‑driven trends but structural opportunities; no universal rallies or collapses but moderate recovery; no universal profits or losses but stratified profitability.

Clear core market themes prevail: strong raw materials versus weak end‑use demand; coking coal sets directional anchors and full‑chain structural differentiation takes hold. Following completion of contract roll‑over, futures coking‑coal contract JM2701 becomes the core anchor for the whole complex and directly governs market trajectories for September‑October. Chain‑reaction‑style market‑driven steel‑mill‑output‑cuts triggered by compound dual‑raw‑material‑cost‑inflation represent the core variable reshaping industrial‑chain supply‑demand balances and driving phased market moves. Multi‑path games around JM2701 deep‑discount dynamics constitute the primary vehicle for market long‑short re‑equilibration.

From cyclical‑logic perspective: the Rust‑Era has definitively terminated large‑scale demand‑driven unilateral cycles. Marginal supply‑side shifts, raw‑material‑supply‑demand mismatches and capital‑driven contract roll‑over disturbances become key sources of price volatility and product‑level differentiation. January‑August domestic‑offshore iron‑ore divergence laid foundations for cost‑oriented weak equilibrium; May‑August coking‑coal tight‑balance enabled valuation recovery; August‑September contract roll‑overs amplified futures volatility; September‑October cost‑driven output‑cuts restructure supply‑demand balances. Progressive multi‑variable interactions form the complete operating logic for autumn‑winter ferrous‑metal markets.

Market‑timing observations: early‑September focuses on coking‑coal stabilization‑and‑recovery alongside spread convergence; mid‑September validates peak‑season‑demand performance and coke‑price‑hike implementation; late‑September monitors steel‑mill‑output‑cut materialization. October market‑game focus shifts toward winter‑stock‑building expectations and deepening negative‑feedback dynamics. Mid‑to‑late October serves as the primary risk window for supply‑demand rebalancing and market‑trend shifts. Overall markets feature valuation‑repair tendencies with resistance against sharp declines and steadily rising price gravity, dominated by structural and phased swing‑trading opportunities.

From trading‑and‑industrial‑operation perspectives: traditional aggregate‑volume‑game and unilateral‑cycle‑thinking paradigms are fully invalidated. Current‑market participants must embrace “structure‑oriented winning, operation‑oriented winning, pricing‑oriented winning and prudence‑oriented winning”. Abandon inertial benchmarking inherited from old cycles. Focus on raw‑material‑price‑spread shifts, structural supply‑demand disparities and transitions in output‑cut rhythms. Capture definitive dividends through refined operations and structural arbitrage. Anchor on coking‑coal’s role as phased pricing barometer, closely track cost‑driven‑output‑cut themes and filter out market noise.

VI. Core Tracking Variables and Risk Reminders

(I) Eight Core Tracking Variables

1. Enforcement intensity of safety‑ and environmental‑protection supervision across Shanxi‑Shaanxi‑Inner Mongolia producing regions, governing near‑term coking‑coal‑supply tightness and forming the pricing foundation for the ferrous complex.
2. JM2701 futures‑price movements and two sets of futures‑spot‑price spreads, for judging discount‑recovery paths and monitoring complex‑sentiment turning points.
3. Scope, duration and resumption‑rhythm of steel‑mill output cuts and shutdowns, representing core variables reshaping supply‑demand balances.
4. Real‑estate new‑start‑and‑construction‑in‑progress statistics, determining recovery ceilings for construction‑steel‑product demand.
5. Mongolian‑coal‑cross‑border‑clearance volumes, port inventories and overseas‑mine‑shipment data, tracking raw‑material supply‑demand rhythms.
6. Steel‑mill profit‑and‑loss evolution, governing industrial‑chain‑cost‑transmission and production‑adjustment behaviors.
7. Implementation progress of the fifth round of coke‑price hikes and steel‑mills’ acceptance levels, shaping coal‑coke performance in early September.
8. Actual magnitude of pre‑emptive winter‑stock‑building activity, determining Q4 demand resilience for raw materials (coal, coke, iron ore).

(II) Four Core Risk Reminders

1. Under‑expectation peak‑season end‑use‑demand recovery, triggering deepening full‑chain negative feedback and output‑cuts exceeding baseline projections.
2. Marginal relaxation of coal‑coke supply, weakening cost‑support strength and shaking the pricing foundation of the ferrous complex.
3. Disordered capacity resumption for commodity‑grade steel, intensifying industry‑wide price competition and suppressing steel‑price‑recovery scope.
4. Repeated capital‑sentiment‑driven games causing irrational futures‑price volatility.

Overall systemic risks remain manageable. Core market contradictions center on valuation‑repair dynamics and structural‑phased volatility stemming from raw‑material‑supply‑demand mismatches and cost‑driven‑output‑cuts.

2026 marks the year when the Rust‑Era becomes fully entrenched within the ferrous‑metal industrial chain. Old‑cycle‑game logics fade completely. Structural differentiation, moderate recovery, stock‑volume‑based games and cost‑driven‑supply adjustments emerge as new industrial norms.

VII. Conclusions

Drawing upon seven prior serial research reports, cross‑validated against SteelHome empirical data and on‑site industrial investigations, this paper closes the logical loop for September‑October 2026 ferrous‑metal‑market dynamics: leveraging rigid near‑term‑supply conditions, low inventories and strong basis, coking coal acts as the absolute pricing anchor and core barometer for the current ferrous‑metal market, dominating complex‑wide trends throughout the cycle. Tight coking‑coal supplies and compound cost inflation for dual raw materials force market‑oriented steel‑mill‑output‑cuts, serving as the core mechanism reshaping industrial‑chain supply‑demand balances and driving phased market moves.

January‑August structural domestic‑offshore‑price divergence for iron ore, compounded by surging coal‑coke prices, created severe negative production‑sales margins for steel mills. The deep discount formed after JM2701 roll‑over may resolve through three paths: futures upward adjustment, spot‑price downward correction, or bilateral futures‑spot convergence, with gradual bilateral convergence representing the baseline scenario. Contract‑switch completion by late‑August‑early‑September shifted market‑trading logic from near‑month‑delivery games toward medium‑term supply‑demand inference. Futures stabilized on September 4. The magnitude of coking‑coal recovery next week constitutes the critical signal for the complex’s return to structural‑recovery momentum.

No systemic unilateral cycles are expected for September‑October ferrous‑complex markets. The overall pattern features coking‑coal‑anchored directional trends, firm coal‑coke performance, cost‑driven‑output‑cut pressures, differentiated steel‑product recovery and stable iron‑ore oscillations. Presently, steel‑mill coke‑inventory divergence is prominent with robust pre‑hol‑iday‑stock‑purchasing willingness. Blast‑furnace‑output‑cuts remain localized; no industry‑wide collective‑shutdown event has occurred. Market consensus confirms: scale and timing of blast‑furnace maintenance‑and‑production‑curtailment constitute core turning‑point indicators. Upside boundaries for coke and the broader complex are ultimately constrained by steel‑mills’ cost‑bearing limits. Meanwhile, under deep‑discount forward‑month contracts and revised warehouse‑receipt‑cost standards, traditional historical‑benchmarking frameworks are invalid; valuation frameworks for this market cycle must be re‑evaluated.

In summary, September‑October ferrous‑metal markets find bottoms supported by definitive industrial dividends, while end‑use‑sector weakness and capacity‑driven‑price‑competition cap upside potential. Tight coking‑coal‑supply catalyzes phased ferrous‑complex recovery. Cost‑driven supply contraction represents the sole major upside‑surprise variable. Market‑outlook judgments and industrial‑business decisions must thoroughly discard old‑cycle aggregate‑volume‑game‑mind‑sets. Participants should firmly anchor on coking‑coal as pricing anchor, closely observe futures‑spot‑spread evolution and output‑cut implementation rhythms, and explore structural supply‑demand disparities to accurately capture phased and structural definitive market returns within stock‑volume‑oriented market games.