India's Steel Sector Imports 90 Percent of Metallurgical Coal Needs

India's steel sector depends on imports for around 90 per cent of its metallurgical coal requirements, even as 64 per cent of upcoming steel capacity expansion — totalling 382 million tonnes per annum under development — relies on coal-intensive blast furnace technology, according to a briefing note by the Institute for Energy Economics and Financial Analysis. The report warns that diversification toward US coal supplies offers only limited relief in a globally volatile market.

India's target of reaching 300 million tonnes per annum of crude steel capacity by 2030 will sharply increase metallurgical coal demand. At an average of 770 kilograms of coal per tonne of steel, planned blast furnace capacity alone could require an additional 140 million tonnes per annum of coal — nearly doubling current supply levels. Australia continues to dominate seaborne met coal exports, holding nearly half of global supply and setting benchmark prices. Flooding in Queensland in early 2026 disrupted mining operations and logistics, pushing premium hard coking coal prices to $252.5 per tonne on February 4 — an 18-month high and more than 50 per cent above March 2025 lows.

The United States has emerged as India's second-largest met coal supplier, with its share rising from about 8 per cent in FY21 to roughly 15 per cent in FY25. However, the IEEFA report cautions that US shipments take 40 to 45 days to reach India versus 20 to 25 days from Australia, increasing freight costs and supply chain uncertainty. US export capacity is also limited and expected to decline, even as India's demand rises. Indian steelmakers adopting stamp-charging technology optimised for blends of domestic and Australian coal face additional constraints on using US-origin coal.

IEEFA's findings come amid heightened global energy uncertainty linked to the US-Israel war on Iran, which has exposed vulnerabilities in fossil fuel supply chains and shipping routes. India's met coal imports are projected to rise to 149 million tonnes by 2035 from about 94 million tonnes in 2026, according to S&P Global estimates. IEEFA recommends accelerating scrap-based electric arc furnace steelmaking and scaling green hydrogen-based production to reduce structural dependence on imported coal, arguing that without a technology shift, supplier diversification alone cannot resolve the sector's underlying energy security challenges.

Key figure — $252.5 per tonne premium coking coal price peak