India's met coal imports expected to rise 9% y-o-y in FY'26 on steel production growth

• HCC imports jump 37%, PHCC arrivals remain stable y-o-y
  
  
• Policy curbs on met coke imports lift coking coal demand
  
  
• Imports to continue amid rising BF-based steelmaking capacity
  
  

Morning Brief: India's imports of metallurgical coal (including coking coal and pulverised coal injection) are projected to rise 9% y-o-y to 83 million tonnes (mnt) in FY'26, according to data maintained by BigMint. Imports of coking coal are expected to increase 11% y-o-y to 63 mnt, while pulverised coal injection (PCI) volumes are likely to rise 3% to 20 mnt.

The growth was primarily driven by higher steel output in India. Policy-led shifts - the quantitative restrictions on met coke imports - also boosted coking coal sourcing.

India's structural dependence on coking coal imports persists despite rising demand from steelmaking. High ash content in Indian coking coal limits its direct use in blast furnaces, requiring reliance on imported material for around 90% of demand. Only a small fraction of domestic coal is suitable for steelmaking after washing.

Highlights of India's coking coal import landscape in FY'26

Steel output growth drives increase in imports: Higher steel production was the primary driver of India's rising metallurgical coal demand. India's crude steel output is projected to rise about 11% y-o-y to 168 mnt in FY'26, with hot metal production expected to increase 6% to 98 mnt, according to BigMint's estimates.

Blast furnace-based production, which accounts for a significant share of India's steel output, is heavily dependent on coking coal. Increased hot metal production directly translates into higher coke consumption, thereby raising coking coal imports.

Parallelly, demand from the foundry segment also contributed to increased coking coal consumption. Foundries use coke derived from coking coal in cupola furnaces for casting iron components used in automotive, infrastructure, and machinery sectors. Moderate growth in these downstream industries has led to steady demand for foundry-grade coke, indirectly supporting coking coal imports.

Sourcing shifts amid grade optimisation: India's coking coal import mix shifted in FY'26, reflecting mills' efforts at cost optimisation and diversification of supply. Imports of hard coking coal (HCC) are estimated to have increased sharply by 37% y-o-y to 29 mnt, while premium hard coking coal (PHCC) volumes remained stable at nearly 20 mnt.

Steelmakers are increasingly blending premium grades with lower-cost hard coking coal from multiple origins to optimise input costs without significantly affecting blast furnace performance.

In terms of region-wise sourcing, besides stronger inflows (+13%) from Australia, higher availability of low-volatile coking coal from the US supported increased imports from the region (+17%), aided by competitive pricing and flexible cargo options. Russian imports (+12%) also gained traction due to discounted pricing following trade dislocations. Supplies from Mozambique increased as well (+27%), supported by higher output from the Moatize basin and suitability of mid-volatile coal for blending.

At the same time, PCI usage increased modestly. PCI allows steelmakers to partially substitute coke in blast furnaces, reducing the coke rate and overall production costs. This was also driven by volatile coking coal prices, due to which Indian mills increased PCI usage as a cost-control measure.

Policy curbs on met coke imports boost coking coal demand: Government policy also played a significant role in lifting coking coal demand. Quantitative restrictions on low-ash metallurgical coke from overseas reduced availability of imported coke, pushing steelmakers to increase in-house coke production and, by extension, coking coal imports.

The restrictions, initially imposed in December 2024 and later extended through 2025, capped imports at 2.85 mnt annually with quarterly allocations of 713,583 tonnes, as per government notifications. These measures were introduced following concerns from domestic producers over low-priced imports, particularly from Indonesia.

As a result, domestic metallurgical coke production rose 9% y-o-y to 47.56 mnt in 11MFY'26, indicating higher capacity utilisation.

However, in December 2025, India imposed a provisional anti-dumping duty ranging within $60.87-130.6/t on imports from key supplying countries, including China, Indonesia, Colombia, Japan, and Russia. At the same time, quantitative restrictions were withdrawn, making imports freely permissible but subject to duties.

Outlook

India's blast furnace capacity expansion is expected to sustain demand growth for metallurgical coal in FY'26. Around 3 mnt of fresh capacity (across the environmental clearance and consent-to-establish stages) were approved in FY'25, with a further 26 mnt receiving the green light in FY'26, according to BigMint data. Overall, coking coal demand is set to increase from 48 mnt in FY'24 to over 70 mnt by FY'30, as per BigMint's projections.

To accelerate domestic production, the government has classified coking coal as a "critical and strategic mineral" under the Mines and Minerals (Development and Regulation) Act, 1957. The move brings coking coal under the National Critical Mineral Mission, which will help streamline approvals, fast-track clearances, and accelerate development of deep-seated and technologically complex deposits.

However, due to domestic coking coal's high ash content and the resultant lack of suitability for steelmaking use (despite washing), it is unlikely that this policy intervention will significantly help India curtail imports.

India is also pursuing overseas asset acquisitions, particularly in Southeast Asia, to secure long-term supply outside of Australia. Delegations to countries such as Indonesia and Malaysia are planned to explore investment opportunities. Additionally, steelmakers are ramping up efforts to ensure raw material security: JSW Steel will develop the Minas de Revuboa coking coal mine in the Moatize coal basin, Mozambique, while NMDC is exploring the feasibility of reserves in Canada.

Similarly, as part of its latest trade deal with the US, India intends to purchase $500 billion worth of American goods over the next five years, including energy products such as coking coal. This will further reduce India's heavy reliance on Australian coking coal, which accounts for over 50% of total imports.

However, in March and until the end of the Middle East conflict, supply-side constraints are expected. Elevated freight costs linked to geopolitical tensions may affect import economics and sourcing patterns, keeping purchases limited.