Indian steel mills face margin squeeze as global coking coal prices rise

Business Recorder reported that Indian steel mills are under growing margin pressure as coking coal prices climb, with disrupted supply in Australia and China plus the Iran war lifting production costs. Premium hard coking coal averaged $236 per metric ton FOB Australia over the seven months to July 2026, up 25% from a year earlier, according to consultancy CRU. Coking coal represents close to 40% of what it costs to make steel, which leaves mills exposed.

India, which trails only China in crude steel output, relies on imports for 95% of its coking coal needs, with at least half of that volume coming from Australia. Executives said higher prices have squeezed margins, with little room to raise steel prices given cheap Chinese steel. BMI expects costs to remain elevated in the second half, partly because of lost supply after a coal mine disaster in Shanxi, China.

Import demand is also climbing, with BigMint projecting a rise of 2 to 3 million tons in 2026-27 against 64 million tons a year before. Freight and insurance costs are rising too, partly due to disruptions linked to the US-Iran war. Moody's Ratings said trade flows have tightened, while Russia, Mozambique and the United States are set to ship more coal to India.