Indian steelmakers are seeking to diversify coking coal supplies as higher prices and disruptions in major producing regions increase steelmaking costs, Reuters reported.
India imports around 95pct of its coking coal needs, with Australia supplying at least half. Coking coal accounts for nearly 40pct of steel production costs, leaving blast furnace-based mills particularly exposed to price increases.
Premium hard coking coal prices averaged USD 236 per ton FOB Australia in the first seven months of 2026, up 25pct YoY. Supply disruptions in Australia, slower mine ramp-ups, the Middle East conflict and a recent mine accident in Shanxi, China have supported prices.
Every USD 10 per ton increase in coking coal prices adds around USD 7-9 per ton to steelmaking costs, according to an industry executive quoted by Reuters. Mills have limited scope to pass on higher costs amid competition from low-priced Chinese steel.
India’s coking coal imports are expected to rise by 2-3 mln tons in 2026-27 from 64 mln tons a year earlier. Higher import demand, along with increased freight, diesel and insurance costs, is adding further pressure on margins.
Australia is expected to remain India’s largest supplier, while steelmakers are seeking to increase supplies from Mozambique, Russia and the US.
Indian mills are also exploring Mongolian coking coal, although logistical challenges remain. Higher raw material and logistics costs could squeeze margins and potentially delay investment and capacity expansion despite strong domestic steel demand, the report said.