The challenges and opportunities facing the Indian steel industry, particularly concerning coking coal supplies and the reliance on Australian metallurgical coal, provided the key takeaways from the Coaltrans India 2025 conference in New Delhi on February 10-12.
Supply-demand imbalance
The head of marketing strategy for steelmaking coal at a major mining company presented a sobering outlook on the future of coking coal supply, emphasizing that its growth is failing to keep pace with increasing demand.
Australia currently supplies roughly half of the global coking coal market, which totals approximately 331 million tonnes, with the remainder coming mostly from suppliers in the United States, Canada and Russia.
Russia primarily supplies hard coking coal (HCC) and pulverized coal injection (PCI). US supplies are mostly high-volatility coking coal, with a smaller share of HCC. Canadian supplies are about 60% HCC, while Australia predominantly produces HCC and premium hard coking coal (PHCC), both essential for the Indian steel industry’s baseload, according to the expert.
“When I look at supply, I struggle to see how these supplies will unfold to match up with Indian demand for coking coal,” the expert told delegates, pointing to a lack of new projects, scarce capital and a bleak investment climate in Australia and other regions. The depletion of existing coal reserves would further exacerbate the issue and there would be a growing supply deficit just when demand is expected to rise, the export added.
Indian steelmakers fulfilled the Ministry of Steel’s goal of producing 144 million tonnes of crude steel in the year to 31 March 2024. The ministry has set a goal for capacity to reach 300 million tonnes by 2030.
To achieve that, however, Indian steelmakers will need to secure about 220 million tonnes of coking coal every year, Fastmarkets understands.
According to an Indian steel industry official, about 60% of India’s coking coal imports came from Australia in 2019, but that percentage has gradually declined over the past five years, with Indian steelmakers increasingly turning to Russia and the US for supplies.
Steelmakers adapt to thin margins
Faced with this challenge while operating in a thin profit-margin environment, India’s steelmakers have been exploring alternative strategies, including experimenting with non-premium HCC and compacting the coal using stamp charging to enhance the coke strength after reaction (CSR) of the coke produced.
While this method offer some improvement in quality, PHCC remains essential for the base load of coke plants. Additionally, increasing PCI rates has proven helpful in optimizing costs over the past few years.
Rising met coke consumption, imports
Rising demand for steel was fueling the surge in India’s met coke consumption, BigMint Technologies analyst Nishtha Mukherjee told delegates, adding that it would reach 70 million tonnes by 2030, up from 40 million tonnes in 2020.
She said that to try and meet this demand, Indian met coke capacity is expected to expand by more than 50% by 2030, rising to 85 million tonnes with output forecast to rise to 65 million tonnes. Current capacity is 56 million tonnes, with output at 48 million tonnes, Fastmarkets understands.
But escalating demand has also led to a near-doubling of India’s met coke imports, Mukherjee added, which are predicted to have risen from 2 million tonnes in 2021 to an estimated 6 million tonnes by the end of March 2025
Over-reliance on Australian met coal
Adding a layer of complexity, in his presentation to the conference, the lead analyst at the Institute for Energy Economics & Financial Analysis (IEEFA) think-tank, Simon Nicholas, highlighted the growing risks associated with India’s heavy reliance on Australian met coal.
He said that, despite volumes gradually declining, India still imported more than 42 million tonnes of met coal from Australia in 2023.
He focused on several key issues, including the rising environmental, social, and governance (ESG) concerns surrounding coal mines in Australia, which could affect investment and production; the uncertainly over the availability of bank financing for met coal projects; and the potential impact of these factors on met coal prices.
He also said the Australian government had a history of overestimating future met coal exports.
To mitigate these risks and to ensure a stable supply of coking coal for the Indian steel industry. Nicholas said India should further reduce its dependence on Australian coking coal by diversifying its supply chains and by exploring alternative technologies for steel production.
To this end, he added, the Indian government has already asked Indian steelmakers to blend domestic met coal with Australian and other superior varieties of coking coal.
Nicholas also pointed to a statement by Whitehaven Coal, which said: “Over the longer term, the expected structural shortfall in global metallurgical coal production, particularly the long-term depletion of HCC from Australian producers combined with increased seaborne demand from India, is anticipated to drive [up] metallurgical coal prices.”
This sentiment underscores the urgent need for strategic planning and proactive adaptation in the Indian steel sector, Nicholas added.
Navigate the complex markets with our reliable and market-reflective coal price data and transparent pricing methodology. Talk to our experts today.
