January 1, 2025 - India's imports of metallurgical coal used in steel production are set to increase by over 8% y-o-y in calendar year 2024 (CY'24) to around 77 million tonnes (mnt), as per provisional data with BigMint. Metallurgical coal, or met coal in common parlance, includes coking coal of hard, semi-hard and semi-soft varieties, as well as pulverised coal injection (PCI) coal used for injection into the blast furnace during ironmaking.

While coking coal imports by India are projected to rise by around 7% y-o-y to 59 mnt in CY'24, PCI imports are slated to increase to 18 mnt from 16 mnt last year.

Uptick in consumption

BigMint data projects that domestic consumption of met coal may rise by around 6% y-o-y in CY'24 to roughly 82 mnt. India's crude steel production has registered a growth of 5.9% y-o-y to 136 mnt in January-November of the current year, as per World Steel Association data.

Coking coal consumption is being triggered largely by the growth in hot metal production: data reveals that domestic hot metal production may rise by around 3.5% y-o-y to approximately 89 mnt in CY'24.

Similarly, demand for metallurgical coke used in ironmaking is expected to edge up by over 6% y-o-y in CY'24, thereby supporting imports of coking coal which account for over 90% of India's coking coal demand.

Met coal import dynamics

In the January-November period, imports of met coal increased by nearly 8% to 70.3 mnt. PCI imports are showing a sharp growth of 13% y-o-y to 17.3 mnt, as per provisional data.

Notably, India's efforts at import diversification has resulted in shipments from the major supplier Australia to fall by over 6% on the year in January-November'24 to around 29 mnt, while imports from Russia have surged nearly 40% y-o-y to around 6.3 mnt.

Imports from the other key supplier, US, may increase by 9%y-o-y to approximately 7.9 mnt.

The Australian government's Department of Industry, Science and Resources predicts that the long-term demand outlook for India is underpinned by significant blast furnace expansion. As a growing steel producer, India continues to diversify its metallurgical coal supply base.

"Australia's market share fell from 49% in 2023 to 44% of India's imports in the first 8 months of 2024, while Russia (20% market share), the US (12%) and Mozambique (4%) gained market share by 1-2% over (2024) same period. Russian PCI coal volumes increased 22% during the same period (January-August'24) and represented 51% of Indian PCI imports. Australian PCI exports to India fell 2% over the same period, with Indian importers preferring cheaper Russian PCI at a CFR basis," the Department of Industry, Science and Resources notes in its latest report.

Outlook

Due to rapid expansion in India's BF-BOF steel production capacity, the country's hot metal production in CY'25 is expected to edge up by around 7%, as per BigMint forecast. In the same token, demand for coking coal is projected to tick up roughly by 5%.

Imports of met coal may rise in CY'25 to around 84-85 mnt, which includes both coking coal and PCI. Imports are likely to rise by 9-10% y-o-y. Restrictions on quantities of met coke imported, imposed recently for a definite time period, could well trigger higher coking coal imports for domestic production of high-grade coke to meet steel industry needs.