India’s Coal Imports Shift Focus to Steel Production Amid Surge in Metallurgical Coal Demand

India’s coal import composition is undergoing a significant transformation, with the latest MCX report indicating a sharp rise in metallurgical coal imports for FY2025-26. Overall, imports of metallurgical and non-coking coal remained nearly stable, at approximately 244.2 million tonnes, a slight decrease from 245.3 million tonnes the previous year. Notably, coking coal imports surged by 12.4% year-on-year to 63.7 million tonnes, while pulverised coal injection (PCI) imports also increased by 6.2%, bringing metallurgical coal imports to a total of 84.5 million tonnes, up 10.4% from the previous year. This shift signals a decline in dependence on thermal coal, attributed to improved domestic availability and a growing emphasis on steel production.

This evolving coal import profile has multiple implications for the common citizen and market dynamics. For consumers, the increased focus on metallurgical coal suggests a sustained demand for steel, a key component in infrastructure and construction. As the steel industry leans more on imported raw materials, fluctuations in global coal prices could directly affect domestic steel costs, which may ultimately influence consumer prices and economic activity. Additionally, decreased reliance on imported thermal coal may enhance energy security, as domestic supplies are better utilized, potentially stabilizing electricity prices in the long term.

Looking forward, the long-term outlook reflects a strategic pivot by the Indian government and RBI towards enhancing the domestic steel industry’s capabilities while ensuring a secure base of raw material imports. With steel demand projected to grow, the government may consider incentivizing domestic coal production quality improvements and investing in infrastructure to support the evolving energy landscape. This could include policies fostering partnerships with international suppliers, such as Russia and Australia, to secure stable and quality-driven coal imports. Ultimately, streamlining these efforts should be aimed at reducing overall import costs and bolstering domestic production capacity for metallurgical coal, aligning with broader economic objectives in the steel sector.

Source: The Hindu

(Expert Note: This report was independently prepared by the Wealthova Economy team.)