Coking Coal Prices Surge 25% This Year, Squeezing Indian Steelmaker Margins

The Quick Take

• Coking coal prices surged 25% in 2026, significantly compressing margins at Indian steel producers.
• Higher input costs are delaying capacity expansion plans across the Indian steelmaking industry.
• Analysts and industry executives warn the margin squeeze could persist through the near term.

Coking coal, the key raw material for steel production, has surged 25% in 2026, placing severe margin pressure on India's integrated steelmakers. Unlike thermal coal used for electricity generation, coking coal is structurally difficult to substitute in conventional blast furnace steelmaking. India's major steel producers — including Tata Steel, JSW Steel, and SAIL — import the majority of their coking coal from Australia and the Americas, making them highly vulnerable to global price swings.

The margin squeeze has concrete operational consequences: capacity expansion projects are being delayed as return-on-investment calculations deteriorate at elevated raw material prices. This is a negative read-through for Indian steel sector capex, infrastructure timelines, and construction supply chains. Globally, Chinese steel demand softness has paradoxically kept finished steel prices from rising commensurately with input costs, creating a cost-price squeeze that particularly hurts Indian producers competing on export markets.

The key catalyst to watch is Australian coking coal supply — any port disruptions, flooding, or mine operator production cuts would extend the price surge. On the demand side, Chinese infrastructure stimulus announcements are the most important variable: renewed Chinese steel demand would push coking coal prices higher while also providing relief to Indian exporters selling semi-finished products. Indian steel companies' Q2 FY27 results will reveal the true margin impact of the 25% cost increase.

Synthesized from 1 source.