Business

Coal’s not well: Steel mills see the margins melting

By Sohail Khan 19 August 2026, 1:10 pm

Benchmarks
Nifty24,058.85-96.06

FEATURED FUNDS★★★★★

Motilal Oswal Midcap Fund Direct-Growth

5Y Return
23.26 %

Invest Now

Enter search text:

Business News›Industry›Ind'l Goods/Svs›Steel›Indian steel mills face margin squeeze as global coking coal prices rise

Read Today's Paper

Indian steel mills face margin squeeze as global coking coal prices rise

Synopsis

Indian steelmakers face margin pressure from higher coking coal prices. Supply disruptions in Australia and China raise steelmaking costs significantly. These increased costs could delay capacity expansion plans for mills. Higher import demand also contributes to rising transport and freight expenses. Companies are diversifying imports while seeking new supply sources.

FILE PHOTO: Indian steel mills face margin squeeze as global coking coal prices rise — FILE PHOTO: An employee works at a steel production line of the Jindal Stainless facility in Hisar, Haryana, India, May 30, 2025.

Indian steel mills are facing mounting pressure on margins as higher coking coal prices, driven by supply disruptions in Australia and China and the Iran war, raise steelmaking costs, executives and analysts said.

India, the world's biggest crude steel producer after China, meets 95% of its coking coal needs through imports, with at least half shipped from Australia. Coking coal accounts for nearly 40% of steel production costs.

Squeezed margins could impede investment and delay capacity expansion as Indian steelmakers step ‌up spending to meet ⁠buoyant ⁠domestic demand driven by infrastructure and strong economic growth.

IMPORT DEMAND GROWS

Coking coal imports are expected to rise by between 2 million and 3 million tons in 2026-27 from 64 million tons a year earlier, commodities consultancy BigMint said.

With the higher demand for imports, comes higher ‌transport costs, partly due to disruptions from the U.S.-Iran war.

"Trade flows have tightened with high demand from India and higher diesel, freight and insurance costs," said Hui Ting Sim, vice president at Moody's Ratings.

Australia is expected to continue meeting at ⁠least half of India's coking coal needs, although imports from Russia, Mozambique and the United States are also set to rise.

Discounts on Russian coal, which accounted for 24% of India's coking coal imports in recent years, have diminished over the past two years, Khurmi said.

"Over the longer term, we expect Mozambique to overtake the United States and Russia as the second largest exporter of coking coal to India after Australia," Brooks said, adding that Indian companies such as state-run Steel Authority of India and JSW Steel were turning to Mozambique for supplies.

India has been seeking to diversify its coking coal imports and gain access to Mongolia although experts say this remains difficult because of logistical challenges.

Add as a Reliable and Trusted News Source
Add Now!

(You can now subscribe to our WhatsApp channel)

(Catch all the Business News, Breaking News and Latest News Updates on The .)

…moreless

(You can now subscribe to our WhatsApp channel)

Read More News on
global coking coal prices riseIndian steel mills margin squeezecoking coal imports IndiaAustralia coking coal suppliercoking coal supply disruptionssteel demand in Indiasteel production cost increasesteel authority of indiatata steeljsw steel

(Catch all the Business News, Breaking News and Latest News Updates on The .)

…moreless

Enter search text:

Continue reading with one of these options:
Limited Access
Free
Login to get access to some exclusive stories

& personalised newsletters
Login Now

Unlimited Access
Starting @ Rs120/month
Get access to exclusive stories, expert opinions &

in-depth stock reports
Subscribe Now

Unlock Access to All Exclusives with ETPrime FREE TRIAL

15 Days Free: Unlock All ETPrime Exclusives, Market Tools & ePapers

Trial offer expiring in00 : 05 : 00

I'd rather pay ₹2599 now

Uh-oh! This is an exclusive story available for selected readers only.

Worry not. You’re just a step away.

Prime Account Detected!

It seems like you're already an ETPrime member with

Log out of your current logged-in account and log in again using your ET Prime credentials to enjoy all member benefits.

Unlock ETPrime's Exclusive Stories Today!

Subscribe to gain powerful insights on business, stock market and industry trends.

Big Price Drop! Flat 40% Off

Student Only Offer

Already a Member? Sign In now

Already a Member? Sign In now
Already a Member? Sign In now

Offer Exclusively For You

Save up to Rs. 700/-

ON ET PRIME MEMBERSHIP

Avail Offer

Offer Exclusively For You

Get 1 Year Free

With 1 and 2-Year ET prime membership

Avail Offer

Offer Exclusively For You

Get 1 Year Free

With 1 and 2-Year ET prime membership

Avail Offer

Offer Exclusively For You

Get Flat 40% Off

Then ₹ 1749 for 1 year

Avail Offer

Offer Exclusively For You

ET Prime at ₹ 49 for 1 month

Then ₹ 1749 for 1 year

Avail Offer

Special Offer

Get flat 40% off on ETPrime

Avail Offer
Avail Offer

Claim NowAlready a Member? Sign In now

Need Assistance?

Connect with an ETPrime expert for personalized support and guidance

+91 9484700004

' + h3 + '

' + h4 + '

' + listing + '

What’s Included with

ETPrime Membership

1Exclusive Insights That Matter

Uncover the truth with our investigative stories

Make strategic moves using the real-world case studies

Read industry-specific stories to identify emerging trends

Spot opportunities with in-depth insights that matter

Trump temper on H-1B visas is forcing Indians to do these things to stay put in US

What Adani’s US indictment means for India Inc’s overseas fundraising
Why veterans like Reliance, L&T are on acquisition spree? Aswath Damodaran has an answer.

Will China’s dollar bond sale in Saudi Arabia trump the US in financial world?
Huawei launches its own OS to compete with Google and Apple. But can it win beyond China?

The problem with lab grown diamonds
Why a falling rupee is a better option for the economy

A list of top 20 momentum stocks that have delivered massive returns in one year