According to Reuters, the margins of Indian steelmakers are under pressure due to rising coking coal prices. In India, the world’s second-largest crude steel producer after China, coking coal accounts for around 40% of steel production costs. At least half of the country’s requirements are met by Australia.
According to Banmeet Khurmi, Sydney-based head of metallurgical coal and coke market services at consultancy CRU, premium hard coking coal prices rose 25% in the first seven months of 2026 compared with the same period last year, reaching an average of $236/tonne on an Australia FOB basis.
Khurmi said the increase in prices was driven by supply disruptions in Australia, slower-than-expected commissioning of new mines, the conflict in the Middle East supporting prices, and the impact of a mine accident in China’s Shanxi province.
Costs Expected to Remain High in the Second Half of the Year
BMI analyst Freddie Brooks said costs are expected to remain high in the second half of the year, also due to the supply loss following the mine accident in Shanxi. According to an executive at a major steel producer, every $10/tonne increase in coking coal prices raises the cost of blast furnace-based steel production by approximately $7-$9/tonne.
Three steel industry executives also said that rising coking coal prices are squeezing margins. They noted that the ability to increase steel prices is limited due to low-priced steel coming from China.
Steel shipments from China to India were reported to have increased despite import duties imposed on certain products.
India Diversifies Its Supply Sources
Australia is expected to continue meeting at least half of India’s coking coal requirements. However, imports from Russia, Mozambique and the US are also expected to increase.
CRU’s Banmeet Khurmi said discounts on coal imports from Russia, which has accounted for 24% of India’s coking coal imports in recent years, have declined over the past two years.
BMI analyst Freddie Brooks said that, in the long term, Mozambique is expected to overtake the US and Russia to become the second-largest exporter of coking coal to India after Australia.
It was reported that Indian companies such as state-owned Steel Authority of India (SAIL) and JSW Steel are turning to Mozambique for supplies.
India is also assessing opportunities to access coking coal resources in Mongolia. However, according to experts, logistical challenges make it difficult to secure supplies from the country.
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