New Delhi: India’s coking coal import bill has plunged sharply over the last three years, as the country diversified its imports to Russia and the US, moving away from its top supplier, Australia, according to government data and industry experts. This trend came on the back of a softening of global coal prices.
In fiscal 2026, India imported coking coal worth $11.76 billion, nearly 39% lower than $19.2 billion in FY23. The import diversification started in fiscal 2023 when Russia, which started its war with Ukraine in February 2022, began offering discounts on its coking coal exports.
Coking coal, a high-grade metallurgical coal used to produce coke, the primary reducing agent in blast furnaces, is a critical input for steelmaking.
The value of coking coal imports from Australia has more than halved in the last three years, from $10.63 billion in FY23 to $5.1 billion in FY26, data from the commerce ministry showed. The price erosion in the period is evident from the fact that import volumes in the period from Australia dropped just 9.24% from 30.1 million tonnes in FY23 to 27.31 million tonnes in FY26.
Imports of the commodity from Russia more than doubled from 4.48 million tonnes in FY23 to nine million tonnes in FY26, while in value terms, it increased just 6.25% from $1.15 billion in FY23 to $1.23 billion in FY26—thanks to the attractive discounts offered by the country at war with Ukraine.
Coking coal imports from the US rose more than 36% in the same period to 9.90 million tonnes in FY26.
This change in coking coal sources and value of imports comes at a time that global coal prices have dropped sharply. Benchmark Australian coal fell from $172.8 a metric ton in 2023 to $108.4 each in 2025. The price has recovered some—monthly average for June 2026 was $138.5 per metric ton, World Bank Commodities Price Data showed—but still remains below prices three years ago.
According to data platform Trading Economics, coking coal prices fluctuated between $304.94 per tonne in January 2023 to $232.13 each as of 13 July.
Pulveriser advantage
India has the fourth largest coal reserve in the world but much of its coking coal is of inferior quality and needs washing. "The steel industry has tried to balance the blend with lower prime hard coking coal replacing some volume with pulverized coal injections (PCI) and semi-hard coking coals imported mostly from Russia and the US which is cheaper hence overall forex outflow got reduced however volumes increased,” said Kapil Dhagat, chairman of industry lobby Coal Producers Association.
Even after washing, steel plants need imported coking coal for blending to enhance coal parameters and make it suitable for coke making, Dhagat added. Coke is produced by heating coking coal in an oxygen free environment and the efficiency of the process depends on the commodity's ash content, among other factors.
An expert pointed out to the increasing use of puliverized coal as a second reason of the broad shift away to Russian coking coal. “Australia produces the global gold standard for premium hard coking coal. However, Russia is a massive producer of high-quality, low-ash PCI coal,” said Ajay Mathur, professor, School of Public Policy, Indian Institute of Technology, Delhi.
PCI coal is a high-quality, fine coal powder that steelmakers blow directly into the bottom of blast furnaces to replace a large portion of expensive coke (baked coal). This technique lowers steel production costs.
Prices of pulverized coal are generally lower than those of premium coking coal with the difference ranging from 50% to 95% in high-price market cycles and 60-80% in low-price cycles, Australian consulting and research firm Commodity Insights noted last year.
"PCI injection has helped the steel industry reduce its dependence on expensive metallurgical coke and improve blast furnace economics," according to BigMint, a commodities market intelligence firm. Coke consumption is typically around 380-390 kg per tonne of hot metal, while PCI injection stands at around 150-160 kg per tonne, with the industry targeting 170-180 kg per tonne by 2030, it said.
BigMint added that mills have also diversified PCI sourcing over the past few years, with Russian supplies rising from around 10 million tonnes in 2023 to 15 million tonnes in 2025, while Australian supplies declined from about 6.5 million tonnes to 5.4 million tonnes.
"Australia was the largest supplier as recently as 2021, but mills have increasingly shifted towards Russia because Russian PCI is more cost-efficient than Australian material. So, while sourcing diversification has played a role, the primary driver has been the cost advantage of Russian PCI," it said.
Domestic faultline
The principal strain point continues to be the shortage of domestically produced, high-quality coking coal in India, said P.K. Singh Rathor, principal general secretary of All India Association of Coal Executives. "India's steel sector remains vulnerable to fluctuations in global coal prices, freight costs, exchange rates, and geopolitical disruptions affecting supplier countries."
Less than one-seventh of India's estimated coking coal deposits of some 37 billion tonnes is of prime quality, pointed out another expert. Given their high ash content, "they require washing treatment which adds to the cost and investment. So only 10-15% domestic coking coal is used and the rest is imported,” said Aruna Sharma, former secretary, ministry of steel.
Coal washing or beneficiation is the process of removing dirt, rocks and sulfur from raw coal so it meets the standards needed for steel making.
Mint's queries to ministries of external affairs, steel and coal and the embassies of Russia and the US besides the Australian high commission were unanswered until press time.