India Turns Net Steel Importer, Pulling Its Coal Mix Toward Metallurgical Grades
Government data showing a 36.6% surge in finished steel imports through July is redirecting India's coal demand from thermal toward coking grades as domestic steel output loses ground.
India was a net importer of finished steel for the April-to-July 2026 period, with finished steel imports rising 36.6% from a year earlier, government data showed. The position reflects domestic steel producers ceding ground to cheaper overseas supply — a shift now reshaping which grades of coal India needs, and in what volumes.5
The direct effect on India's coal demand is bifurcated. An MCX report published in August (2026-08-14) found the country's coal import basket tilting sharply toward metallurgical grades, with coking coal volumes rising steeply in FY2025-26 even as thermal coal dependence fell. Total non-coking and metallurgical coal imports reached around 244.2 million tonnes in FY2025-26, the MCX report said.7
Thermal coal is pulling the other way. Imports fell to a four-year low in the January-to-May 2026 period, declining 12% year-on-year to 65 million tonnes, commodities consultancy BigMint said. India, the world's second-largest thermal coal importer, has set a target to cut thermal coal use in power generation by at least 30% this year.1
Renewable energy is absorbing most of the incremental load. Total power generation rose 5% in the first five months of 2026 while renewable generation grew 22% over the same period, BigMint data showed. Power demand climbed 11.2% to a two-year high in May, Grid-India data showed, but much of that growth is being met without additional thermal coal.1
Monthly data confirm the trajectory. India's total coal imports fell roughly 13%, or 3.14 million tonnes, to 21.13 million tonnes in April 2026, the Union Ministry of Coal said on Thursday (2026-07-02). Dependence on imported coal narrowed to 19.7% of overall consumption that month, down from 21.7% in April 2025.4
India is diverging sharply from the rest of the region. Asia was expected to import 73.16 million metric tons of thermal coal in July 2026, up from 70.31 million in June and above the 71.04 million from July 2025, according to Kpler data. China drove the rebound — DBX Commodities data showed arrivals of 28.14 million tonnes in July, the most this year and up from 25.67 million in June — after domestic Chinese coal output fell 9.7% in June. India's July volumes moved the other way.2,3
Domestically, iron ore is not the vulnerability that coking coal is. Provisional iron ore production reached 312.53 million tonnes in FY2025-26, up 8% from 289.40 million tonnes in FY2024-25, according to SMM analysis. March 2026 output of approximately 34.5 million tonnes compared with 25.9 million tonnes in March 2025. Iron ore and pellet imports rose from 4.9 million tonnes to 12.2 million tonnes over three years, but at 3.9% of domestic production, that exposure remains contained.5
But ferrous scrap offers less of a workaround than might be expected. Ministry of Steel parliamentary data show scrap imports declining from 9.5 million tonnes to 7.7 million tonnes over three years, a reduction of 18.9%. A shrinking scrap supply reduces the scope for India to pivot steelmaking toward electric arc furnace routes and away from blast furnaces that depend on imported coking coal, deepening the exposure the steel trade data has made plain.5
Newcastle coal physical traded at $137.75 per tonne as of Tuesday (2026-09-08). Analysts said a meaningful recovery in Indian thermal coal purchases requires Indonesian prices to fall further still. The more exposed variable sits on the met coal side: if Indian steelmakers respond to the import surge by cutting blast furnace utilization, coking coal demand drops with them — and the shift toward metallurgical grades that has defined India's coal import mix since at least April begins to reverse.3,6