Indian steel mills feel heat as coking coal prices rise

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Key points

• Coking coal imports are projected to rise by between 2 million and 3 million tons in 2026-27 from 64 million tons a year earlier, commodities consultancy BigMint stated.
• (Catch all the Business News, Breaking News and Latest News Updates on The Economic Times.).
• India, the world's biggest crude steel producer after China, meets 95% of its coking coal needs through imports, with at least half shipped from Australia.
• Indian steel mills face margin squeeze as global coking coal rates rise.
• Indian steelmakers face margin pressure from higher coking coal rates.

Indian steel mills face margin squeeze as global coking coal rates rise. By ReutersLast Updated: Aug 19, 2026, 01: 10: 00 PM IST.

Indian steelmakers face margin pressure from higher coking coal rates. Supply disruptions in Australia and China raise steelmaking costs significantly. These rose costs could delay capacity expansion aims for mills. Higher import demand additionally contributes to rising transport and freight expenses. Firms are diversifying imports while seeking new supply sources.

Indian steel mills are facing mounting pressure on margins as higher coking coal rates, driven by supply disruptions in Australia and China and the Iran war, raise steelmaking costs, executives and analysts stated. India, the world's biggest crude steel producer after China, meets 95% of its coking coal needs through imports, with at least half shipped from Australia. Coking coal accounts for almost 40% of steel production costs. Squeezed margins could impede investment and delay capacity expansion as Indian steelmakers step ‌up spending to meet ⁠buoyant ⁠domestic demand driven by infrastructure and solid economic expansion.

Tata Steel gets CCI nod to acquire extra 23% stake in TM International Logistics Premium hard coking coal costs jumped 25% from last year to average $236 per metric ton freight on board (FOB) Australia in the first seven months of 2026, noted Banmeet Khurmi, lead, metallurgical coal and coke market service, at consultancy CRU in Sydney. Live Events.

"Prices have been higher this year due to supply disruptions in Australia, slower-than-expected ramp-up at new mines, price support from the conflict in the Middle East and, more recently, a large accident in Shanxi, China, " Khurmi remarked. Costs are probable to remain high in the second half of ⁠the year, partly ‌due to the loss of supply after the Shanxi coal mine disaster, noted Freddie Brooks, commodities analyst at BMI, a unit of Fitch Solutions.: India's steel ambitions face a coal reality check For blast furnace-based steelmakers, every $10 a ton rise in ⁠coking coal rates adds approximately $7 to $9 per metric ton to steelmaking costs, noted an executive at a sizeable steel mill. This person was not authorised to speak to the media. Higher coking coal rates have squeezed margins, three other executives at leading steelmakers stated, with little headroom to raise steel rates, given competition from cheap Chinese steel. Shipments from China have rose despite import tariffs on some grades. IMPORT DEMAND GROWS.

Coking coal imports are projected to rise by between 2 million and 3 million tons in 2026-27 from 64 million tons a year earlier, commodities consultancy BigMint stated. With the higher demand for imports, comes higher ‌transport costs, partly due to disruptions from the U.S.-Iran war. "Trade flows have tightened with high demand from India and higher diesel, freight and insurance costs, " remarked Hui Ting Sim, vice president at Moody's Ratings. Although imports from Russia, Mozambique and the United States are additionally set to rise, australia is projected to continue gathering at ⁠least half of India's coking coal needs. Discounts on Russian coal. It accounted for 24% of India's coking coal imports over recent years, have diminished over the past two years, Khurmi remarked. "Over the longer term, we expect Mozambique to overtake the United States and Russia as the second largest exporter of coking coal to India after Australia, " Brooks remarked, adding that Indian businesses such as state-run Steel Authority of India and JSW Steel were turning to Mozambique for supplies. India has been seeking to diversify its coking coal imports and gain access to Mongolia although experts say this remains tough as of logistical challenges. Add Now!

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Taken together, the developments around indian steel mills feel heat as coking coal prices rise point to a situation that is still moving, and the coming days should bring more clarity.