Indian steelmakers are reeling from a jump in coking coal prices this year that is squeezing their margins and delaying capacity expansion in the steelmaking industry, analysts and industry executives tell Reuters.
India relies on imports for as much as 95% of its coking coal, or metallurgical coal, demand. Metallurgical coal is a grade of coal that is one of the essential raw materials in the steelmaking process. Also known as met coal, this type of coal contains more carbon, less ash and less moisture than thermal coal, which is used for electricity generation.
With India relying on coking coal imports for nearly all its demand, the supply disruptions this year and the surging prices have pressured Indian steel makers.
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The price of premium coking coal freight on board (FOB) in Australia surged by 25% in the first seven months of this year compared to last year due to a series of supply disruptions, Banmeet Khurmi, metallurgical coal and coke market service lead at Sydney-based consultancy CRU told Reuters.
The price increase has been the result of slower ramp-up of new mines, higher prices due to the Iran war, supply disruptions at key producer Australia, and the deadly coal mine explosion in China’s Shanxi province that killed more than 80 people in the worst Chinese mining accident in years.
“Steelmaking coal prices strengthened from CY2025 levels as strong Indian import demand and supply disruptions tightened an otherwise balanced seaborne market,” mining giant BHP said in its Economic and commodity outlook this week.
India has expanded its steelmaking capacity to about 220 Mtpa in the financial year 2026, up 10% year-on-year, and is targeting 500 Mtpa by 2047, much of which will be blast furnace based, according to BHP.
Yet, analysts say that coking coal costs for Indian steelmakers are expected to remain elevated at least through the second half of the year amid supply losses from China and Australia. And the Indian industry will pay the higher costs of the key steel-making commodity without the ability to raise prices because of the Chinese competition, executives told Reuters.
By Charles Kennedy for Oilprice.com
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