Global price spike squeezes India’s mills. Indian steelmakers are facing a margin squeeze as global coking coal prices rise, driven by supply disruptions in Australia and Iran. For an industry that imports 95% of its coking coal, the impact is immediate.
Premium hard coking coal prices jumped 25% in the last year to average $236/tonne FOB Australia, according to BigMint. Every $10/tonne rise adds $7-9 to the cost of producing one tonne of steel, executives said.
The reasons are varied: supply issues in Australia, slower ramp-up of new mines, and conflict in the Middle East. Trade flows have also tightened with higher freight and insurance costs.
India, the world’s second-largest steel producer after China, meets nearly half its coking coal needs from Australia. Other sources include Russia and Mozambique. But discounts on Russian coal, which made up 24% of imports two years ago, have shrunk.
The timing is tough. Domestic demand is strong due to infrastructure spending. But higher input costs are forcing mills to raise steel prices. “Three other executives said headroom to raise steel prices, given competition from cheap Chinese steel,” the report notes.
Analysts expect costs to stay high in H2 2026 due to a mine loss in Shanxi, China. Shipments from China have risen despite tariffs, but not enough to offset the gap.
For steelmakers, the options are limited. They can pass costs to customers and risk losing market share, or absorb them and hurt margins. Either way, capacity expansion plans may slow.
The episode shows India’s vulnerability. As the country pushes to build roads, rail and housing, it remains dependent on imported coal to make the steel. Until domestic alternatives or long-term contracts stabilize, price shocks will keep cutting into profits.