Coking coal: Cycles

How Queensland cyclones jolt the steel industry's costs

The World Bank publishes no coking coal price. The usual benchmark, Australian premium hard coking coal, is more volatile than thermal coal because seaborne supply is concentrated in Queensland, where floods and cyclones have repeatedly cut exports. Demand follows blast-furnace steel output, above all in China and India. China's informal ban on Australian coal from 2020 reshuffled trade flows and prices. Long term, demand faces a structural threat as steelmakers shift to scrap-based electric furnaces and hydrogen-based direct reduction, but blast furnaces last for decades.

No public benchmark price series for this commodity in the datasets used. Many minor materials trade on private contracts.

Super-cycles in coking coal

Coking coal is the most volatile of the bulk commodities. Supply is concentrated in a few basins, mostly Queensland, and new mines take years, while demand follows the blast-furnace steel cycle, above all in China. Until 2010 prices were set once a year between Japanese mills and Australian miners, so spikes showed up as step changes. Since BHP pushed quarterly and then index pricing in 2010, floods, mine accidents, Chinese policy and trade bans have produced spikes several times larger than thermal coal's. Long-run demand is threatened by scrap-based and hydrogen steelmaking, which deters investment and may make spikes more frequent.

1. 2004-2005

   China's steel boom drew in coal and coke; China cut coke exports, and benchmark prices jumped. Geman records 2003 coke prices of $45-50/t FOB.

   The annual hard coking coal benchmark between Japanese mills and Australian miners rose from under $60/t (Japanese fiscal 2004) to about $125/t (fiscal 2005) (indicative; basis: published annual benchmark settlements; no World Bank series exists for coking coal)

2. 2008

   Queensland floods in January 2008 cut exports as Chinese and Indian demand peaked; then the financial crisis cut steel output.

   The annual benchmark settled near $300/t for fiscal 2008-09, roughly triple the 2007 level (indicative; basis: published annual benchmark settlements)

3. 2010-2011

   Pricing moved from annual to quarterly in 2010. The December 2010 to January 2011 Queensland floods shut mines.

   The quarterly benchmark reached about $330/t for April-June 2011 (indicative; basis: published quarterly benchmark settlements)

4. 2016

   Beijing's supply-side reform limited coal mines to 276 working days; Chinese imports surged.

   Australian premium spot prices rose from under $80/t early in 2016 to above $300/t in November 2016 (indicative; basis: daily spot assessments by price reporting agencies, not a monthly average)

5. 2020-2022

   China's unofficial ban on Australian coal from late 2020 redirected trade; then Russia's invasion of Ukraine removed Russian supply to Europe and Japan.

   Premium hard coking coal hit a record of about $670/t FOB Australia in March 2022 (indicative; basis: S&P Global Platts daily assessment, not a monthly average)

What drives the cycle

• Chinese blast-furnace output. China makes about two thirds of the world's pig iron (830 Mt of 1,300 Mt in 2025, USGS), so its steel policy sets demand.
• India's steel build-out. India's pig iron output rose from 90 Mt in 2024 to 98 Mt in 2025 (USGS); new blast furnaces make it the main source of seaborne demand growth.
• Queensland weather and mine accidents. Most premium seaborne supply comes from one basin, so floods and mine fires move world prices.
• Trade policy. China's 2020 ban on Australian coal and sanctions on Russia have repeatedly redrawn trade flows.
• Decarbonisation of steel. Scrap-based electric furnaces and hydrogen DRI threaten long-run demand, which discourages new mines and keeps supply tight.

Metrics to track