New Delhi: India’s plans to scale up steel output are set to deepen its dependence on imported metallurgical coal, according to a new IEEFA report released on Thursday. The report says India imports around 90 percent of its met coal needs and is targeting 300 million tonnes per annum of crude steel capacity by 2030, while 64 percent of the 382-MTPA steel capacity under development is tied to coal-based blast furnace technology.
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It adds that about 770 kilograms of met coal are required to produce one tonne of crude steel, and that the 182 MTPA of blast furnace capacity already announced or under construction would need an additional 140 MTPA of met coal supply, nearly double the current 65 MTPA supply, including imports and domestic washed met coal.
The report says India’s imports reached 59 MT in the January-November 2025 period, up 10.6 percent year-on-year, and are projected to rise further if the current expansion path continues. It also notes that domestic washed coking coal supply stood at only about 5 million tonnes in FY2024, with high ash and sulphur levels limiting usability for steelmaking.
IEEFA argues that shifting more purchases towards the US does not remove the core risk, because Australia still dominates global seaborne met coal exports and any disruption there quickly feeds into world prices. The report says Australia supplied about 72 percent of India’s coking coal imports in FY2021, though that share fell to around 43 percent in FY25 as India diversified suppliers. The US became India’s second-largest supplier over the same period, increasing its share from about 8 percent to roughly 15 percent.
The note points to Queensland flooding in January 2026 as a recent example. It says heavy rain disrupted mining and logistics, forced several miners to declare force majeure, and cut Australia’s met coal exports by 22 percent in the month, according to S&P Platts. Benchmark premium Australian hard coking coal then surged to USD 252.5 per tonne on February 4, an 18-month high and more than 50 percent above the March 2025 lows.
“Freight economics are a key factor,” Simon Nicholas said in the briefing note, pointing to the longer shipping distance for US cargoes. The report says Australian coal has a freight advantage because it travels a shorter route to India, while US cargoes typically take 40-45 days versus about 20-25 days from Australia, raising costs, working capital needs and supply-chain uncertainty. It also says dry bulk freight rates from Australia to India rose 63 percent to USD 27.25/Mt by March 23, up from USD 16.76/MT in February, as shipping fuel costs climbed.
The briefing note says US met coal exports have increasingly shifted towards Asia, with India emerging as one of the largest buyers. It says the US produced 64 MT of metallurgical coal in 2024 and exported almost 80 percent of it, while exports to China collapsed in 2025 because of trade barriers, freeing up more than 8 MT of coking coal that had gone to China in 2024. Much of that volume is now being redirected to India.
Recent India-US trade talks may further encourage that shift. The report says a February 2026 joint statement committed the two countries to deepen cooperation in energy and critical industrial supply chains, including coking coal, and it quotes India’s commerce and industry minister as saying, “We want to diversify coking coal.”
But IEEFA says the move still comes with major constraints. “Even with diversified supply, India will remain exposed to global price volatility, supply disruptions, and climate-related risks in major exporting regions,” Saumya Nautiyal, Energy Finance Analyst, South Asia, IEEFA, said. The report says US export capacity is projected to fall from 44 MT in 2026 to 38 MT by 2035, while Indian met coal imports could rise from 94 MT in 2026 to about 149 MT by 2035 if steel expansion continues along the blast furnace route.
IEEFA says India should reduce dependence on imported met coal rather than simply swap suppliers. The report recommends accelerating scrap-based electric arc furnace steelmaking, strengthening scrap collection and recycling systems, and scaling green hydrogen-based direct reduced iron production. It says Tata Steel has already inaugurated its first scrap-based EAF in India in March 2026.
The note also flags technical limits in existing plants. It says Tata Steel chief executive TV Narendran has described US-origin coking coals as “not suitable” for the stamp-charging technology widely used in Indian coke ovens, which are optimised for blends of domestic and Australian coal. The report says Tata Steel still relies heavily on Australian supply, with around 70-80 percent of its coking coal mix sourced from Australia, and uses only 1 MT of US coal, mainly in select top-charging coke oven batteries.
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IEEFA said that India can build a more resilient and competitive steel sector only by cutting long-term met coal dependence, rather than expanding exposure to imported supply. The report says that approach would better support both energy security and decarbonisation goals.
