Material Insights · Understanding the Material World

Coking coal and Steel

Blast furnace steel needs roughly 800 kg of coal per tonne, most of it as coke, so coking coal demand rises and falls with blast furnace output; India imports about 90 to 95% of its coking coal, with Australia the largest supplier.

Coking coal (energy) and Steel (commodity): 4 relationships.

How they are linked

1. Coke reduces iron ore

Physical flow · Strong · Coking coal → Steel (blast furnace route)

Coking coal is baked into coke, which both heats the blast furnace and strips oxygen from iron ore; few other materials are strong enough to hold up the furnace burden while doing this.

  • about 800 kg coal per tonne of crude steel, blast furnace route
  • about 1,400 kg iron ore per tonne of crude steel, same route

These figures describe the blast furnace and basic oxygen furnace route; scrap-based electric furnace steel does not rest on coke in the same way. Pulverised coal injection lets mills replace part of the coke with cheaper fine coal: worldsteel puts the saving at about 30% of coal, with one tonne of injection coal displacing about 1.4 tonnes of coking coal.

Sources: World Steel Association

2. Price link: main use

Cost and price · Strong · Both ways

Steel output and mill margins set coking coal demand, and coal is a large share of blast furnace cost, so the two prices share a cycle.

  • 0.17 monthly change correlation
  • 0.67 12-month change correlation
  • 1.39 fitted elasticity

Monthly moves are loosely linked, at 0.17, but yearly moves correlate at 0.67, with coal leading by about a month. The site's coal series is a thermal coal proxy and the steel series a US index, so the true link between seaborne coking coal and Asian steel prices is likely tighter than these figures show.

Sources: Material Insights (World Bank, FRED, IMF data)

3. India's import dependence

Shared risk · High in India · Indian steel depends on seaborne coking coal

India's domestic coking coal output is far below what its blast furnaces use, so mills buy most of their coal by sea, with Australia the largest single supplier.

  • about 90% share of India's coking coal demand met by imports, 2024-25
  • about 45% Australia's share of India's coking coal imports, 2024 (25.8 of 56.9 Mt)
  • about 87 Mt India's coking coal demand, 2024-25

Argus puts import reliance even higher, at about 95% in early 2026. Indian imports from Australia in 2024 were about 20% below 2022 as mills bought more from the US, Russia, Mozambique and Canada, which spreads the risk of a disruption at one source. Even so, the large integrated mills still rely on Australian premium coals for their big blast furnaces, so a supply shock there feeds straight into Indian steel costs.

Sources: EY-Parthenon; Argus Media; S&P Global Commodity Insights

4. Steel growth versus coal self-reliance

Policy · Rising · Steel capacity targets raise coking coal needs; coal policy aims to cut imports

India plans a large rise in steel output, which lifts coking coal demand faster than domestic mines can respond, so the government is pushing domestic output and washing.

  • about 135 Mt projected Indian coking coal demand by 2030
  • 66.5 Mt domestic raw coking coal output, 2024-25
  • 140 Mt a year Mission Coking Coal domestic output target for 2030

Domestic raw coking coal output rose from 44.8 Mt in 2020-21 to 66.5 Mt in 2024-25, and eight new washeries of 21.5 Mt a year are planned to 2029-30. India classified coking coal as a critical and strategic mineral in January 2026 to speed approvals. Because much domestic coal must be washed and blended, import needs are expected to keep rising in tonnes even if the import share falls towards the stated goal of below 80% by 2030.

Sources: EY-Parthenon; Argus Media; Press Information Bureau, Ministry of Coal

For investors

Key learnings

  1. Coking coal demand is a direct function of blast furnace output, so Indian steel capacity growth is the main source of new seaborne coking coal demand.
  2. Indian blast furnace margins are exposed to Australian supply and price shocks, softened only partly by the shift towards Russian, US and Mozambican coal.
  3. Pulverised coal injection and scrap-based steel reduce coal per tonne, so coal intensity can fall even while steel output rises.

What to track

  • Australian premium hard coking coal price (FOB): Sets the marginal raw material cost for Indian blast furnace mills (Daily · Argus, Platts or SGX futures)
  • India coking coal imports by origin: Shows diversification away from Australia and volume growth with steel output (Monthly · Ministry of Commerce trade data)
  • India crude steel output by route: More blast furnace output means more coking coal demand per tonne (Monthly · Joint Plant Committee and worldsteel)

For policymakers

Key learnings

  1. With imports covering about 90 to 95% of needs, coking coal is a supply security issue for India's steel ambitions, not only a cost issue.
  2. Domestic coking coal is rising but must be washed to be usable, so washery capacity is as important as mine output.
  3. Diversifying suppliers lowers concentration risk but does not cut total import tonnage; only lower coal per tonne of steel can do that.

What to track

  • Domestic raw and washed coking coal output: Progress towards the 140 Mt a year target and lower import share (Monthly · Ministry of Coal)
  • Share of imports in coking coal use: Tests the goal of below 80% import dependence by 2030 (Yearly · Ministry of Steel and Ministry of Coal)

India

India meets about 90 to 95% of its coking coal needs through imports, about 45% of them from Australia in 2024, and in January 2026 classified coking coal as a critical and strategic mineral, with a 140 Mt a year domestic output goal for 2030.

Sources

  1. Fact sheet: Raw materials, World Steel Association (2018)
  2. Price correlation, Material Insights, Material Insights (World Bank, FRED, IMF data)
  3. India's coking coal imports set to rise (press release), EY-Parthenon (2025)
  4. India classifies coking coal as critical mineral, Argus Media (2026)
  5. Ferrous series: India boosts coking coal diversification amid rising steel output, S&P Global Commodity Insights (2025)
  6. Domestic coking coal production (written reply in Rajya Sabha), Press Information Bureau, Ministry of Coal (2025)