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Here are the five key themes that have recently emerged, setting out the forces at play in the coking coal market for 2025 and beyond. Recent global conferences in Asia and Europe have delivered crucial insights into the forces that are likely to shape the future of the metallurgical coal market. And from the east to the west, while while trade sanctions are an ever-present concern, discussions about future coking coal market dynamics have predominantly revolved around five key factors:
China’s critical role in global metallurgical coal pricing, its economic policies, steel production levels and participation in the spot market will continue to be a focal point. Market participants will be closely monitoring everything from macroeconomic policies to smaller details like DCE movements and other key indicators, as even the smallest changes can have significant implications for global coal markets.
India’s infrastructure and industrial expansion, combined with growth in the steel sector, will ensure sustained met coal demand in India and the country’s role as a key growth engine in the global met coal market will only intensify, with imports expected to rise year on year in 2025 and beyond.
US-China trade relations remain a potential disruptor and any changes in trade policies, particularly the imposition of new tariffs, could have a direct impact on coal exports, particularly from the US.
Russia’s invasion of Ukraine in February 2022 and the subsequent war continues to have a profound impact on global energy markets. There are ongoing discussions about the likelihood of peace talks and specifically whether they would lead to a shift in the international sanctions imposed on Russian producers, particularly those operating in Europe? The possibility of a change in sanctions could result in a rebalancing of Russian coal trade flows, which would have significant implications for the global met coal market.
While European demand is expected to remain relatively stable in the short term, ongoing economic challenges could weigh on industrial activity and any shifts in EU steel production or policy changes related to the Russia-Ukraine war will be critical for coal demand.
China’s influence on the seaborne metallurgical coal market continues to be a focal point, especially in the context of the Australian market. As the world’s largest consumer of met coal, China’s actions in both the physical and derivatives markets have a significant impact on global pricing dynamics.
From announcements of major macro-economic policies to daily movements on the Dalian Commodity Exchange (DCE), China’s economic policies and raw materials consumption patterns play a central role in global market sentiment.
In particular, China has made its presence felt in the spot market, becoming the largest buyer since the lifting of the ban on Australian coking coal. This shift in dynamics has raised the question: Why has China taken over the pricing power, especially when India remains the largest seaborne importer of met coal?
India still remains as the largest importer of Australian met coal, accounting for 29% of total coal exports from Australia from January to September 2024, but China’s influence on the spot market has become undeniably dominant. While China’s share of Australian exports over the same period was just 6%, or 5.62 million tonnes, its role in setting spot market prices for coking coal has grown significantly.
Spot transactions observed by Fastmarkets show that China now accounts for around 45% of all premium hard coking coal (PHCC) transactions in 2024, a significant rise of over 10% points from 2023.
Meanwhile, India’s spot market presence has shrunk to less than 30%. As index setting involves only spot transactions, this shift in spot market involvement has solidified China’s role as the primary driver of seaborne coking coal pricing.
This shift underscores why movements in China’s domestic futures market, particularly the DCE, now have a far-reaching effect on global coal markets.
The term “DCE-fication,” coined by Edwin Yeo from Exen Resources at Fastmarkets’ Coaltrans Bali conference in September, effectively captures the increasing influence of China’s pricing power on the global coking coal market.
And as China continues to play a pivotal role in determining spot prices, its market dynamics are being closely monitored, reflecting the growing recognition of its influence over global pricing.
Nonetheless, India remains a bright spot for met coal demand, with key steelmakers, such as Tata Steel, JSW, JSPL and ArcelorMittal Nippon Steel (AMNS) all having ambitious expansion plans that are likely to bolster the country’s met coal consumption.
JSW currently has 34.2 million tonnes of steelmaking capacity will expand that to 36.2 million tonnes by the end of March 2026 and to 42 million tonnes by September 2027, according to approved capital expenditure plans disclosed by the company in investor presentations.
Tata Steel has about 19.88 million tonnes of steelmaking capacity, but that will increase to 26.6 million tonnes in 2025 when it ramps up production at its Kalinganagar Works in the eastern coastal state of Odisha. The company commissioned its largest blast furnace at Kalinganagar works in September 2024 and said the new furnace increase capacity at the Kalinganagar site from 3 million tonnes to 8 million tonnes at full capacity.
JSPL, meanwhile, has committed to increase its crude steel capacity from 9.6 million tonnes to 15.9 million tonnes by June 2026 and AMNS, which operates a 9 million tonnes capacity facility in Hazira in western India, said it will commission it a new 1.5 million tonnes coke oven by the fourth quarter of 2025.
Medium-sized steel plants are also expanding output, including Shyam Metallics further up the eastern coast in West Bengal, which commissioned a 250,000 tonnes capacity coke oven in October, adding to demand for coking coal.
Because most steel mills in India make steel using blast furnace, the increase in India’s crude steel output is expected to correlate directly with higher met coal consumption, creating opportunities for coking coal exporters everywhere. The projections for increased tonnages coming out of the US and Australia are particularly noteworthy, as more miners and traders look to meet India’s expanding needs.
The relationship between the United States and China has long been contentious, particularly during the previous Trump administration, which saw China impose tariffs on US coal imports.
And as the geopolitical landscape continues to evolve, the future of US exports to China will be a pivotal issue.
What would happen if China reimposed tariffs on US coal? This question is especially relevant as president-elect Donald Trump has clearly suggested he intends to take a tougher stance against China.
But industry insiders have warned that Trump’s approach could be very unpredictable.
One US miner told Fastmarkets that while tariffs might return, the situation may not necessarily worsen, because Trump’s policies are often marked by unexpected shifts in direction.
But quite a few market participants indicated that Chinese traders were in wait-and-see mode about whether to bother engaging with coking coal imports from the US given the uncertainty over Trump.
“Currently, many Chinese international traders are reluctant to engage with US-origin coking coal imports – and particularly state-owned trading companies -, because they are uncertain about how the Chinese government might retaliate if Trump imposes tariffs on Chinese goods on his return to office,” an international trader said at the China Hangzhou Industry Conference in mid-November, in Zhejiang province in east China.
US-origin coking coal is the third largest source for China, accounting for about 8.54% of China’s total coking coal imports per year.
During the first 10 months of 2024, China imported 8.48 million tonnes of coking coal from the US, out of total imports of 99.25 million tonnes. This represents an 111% year-on-year growth compared with the same period in 2023, when only 4.02 million tonnes of coking coal was imported from the US.
Market participants were quick to remember that the relationship between China and the US underwent significant changes during Trump’s previous presidency, including a decline in China’s imports of US-origin coal.
In March 2018, Trump imposed tariffs on Chinese goods, targeting $50 billion worth of imports under Section 301 of the Trade Act of 1974, citing intellectual property theft and unfair trade practices.
Those tariffs began with a 25% duty on $34 billion worth of goods in July 2018, followed by additional rounds covering $16 billion of goods in August and $200 billion in September, escalating to 25% by 2019.
In retaliation, China imposed a 25% tariff on imports of US coal, including coking coal, starting from July 2018. But despite these challenges, US coal exports to China have recently shown signs of growth.
As Trump’s victory in the US presidential election stirred discussions about US-China relations and the potential for new tariffs at many of the conferences since the election, his approach to the ongoing Russia-Ukraine war also emerged as a critical topic — with many speculating on how his policies might reshape the geopolitical landscape and influence global markets, including the metallurgical coal sector.
The possibility of the war coming to an end or of sanctions being lifted remains uncertain to say the least, and that uncertainty continues to loom large over the global met coal market.
Many market participants said the conflict could potentially come to a resolution under Trump’s new administration, which is adding another layer of unpredictability to the outlook for coking coal.
The sanctions imposed on Russian coal have created significant challenges, particularly because Russian coal has been encountering increasing resistance in key markets, including China.
Issues such as payment difficulties have been flagged by many buyers, who are wary of the geopolitical risks involved in sourcing from Russia. While some in the industry are holding out for a shift in sanctions — although it is still premature to predict any substantial changes.
One Indian end-user reflected the general sentiment when he said: “At least in the short term, I don’t think the sanctions will be lifted.”
Similarly, a Chinese buyer echoed this caution: “It’s too early to say if sanctions will be removed and the market still feels the pressure of these restrictions.”
Europe’s met coal demand has also been under scrutiny in recent months, with region facing several economic challenges, including the fall in industrial output and the fallout from the Russia-Ukraine war.
Steel production in Europe, particularly within the EU, has been relatively flat through 2024 and while data from January to October shows that crude steel production in the EU had increased slightly, apparent consumption there has been sluggish continues to face uncertainty.
Nonetheless, according to the World Steel Association, the total crude steel production EU countries in the first 10 months of the year was was 109.3 million tonnes a significant 2.1% increase compared with the same period in 2023.
However, the European Steel Association’s fourth-quarter Economic and Steel Market Outlook shows a continuous decline in apparent steel consumption during the first — two quarters of 2024. Consumption dropped by 1.3% in the second quarter, following a 3% decline in the first. This downturn, linked to war-related disruptions, soaring energy costs and rising production costs, began in the second quarter of 2022 and was subsequently worsened due to global economic uncertainty, rising interest rates and manufacturing weakness around the world.
A leading end user told Fastmarkets at a mid-November conference in central Europe, that they would keep production plans flat year on year for 2025, although demand outlook remained uncertain at this stage.
While downstream demand poses significant challenges for steel producers, the region’s ongoing decarbonization efforts will further intensify the complexity of the steel market outlook.
But the EU’s green deal on steel, underpinned by its Carbon Border Adjustment Mechanism (CBAM), represent a seismic shift for the world’s steel markets, including China, the world’s largest steel producer.
The CBAM, set to impose tariffs on carbon-intensive imports by 2026, aims to prevent carbon leakage and promote greener production methods within and beyond Europe. For China, whose steel exports to the EU face scrutiny for their high carbon footprint, the mechanism is a wake-up call to accelerate decarbonization through innovations like electric arc furnaces and hydrogen-based steelmaking.
According to the European Steel Association, the policy could reshape global trade flows by rewarding low-carbon producers, placing pressure on nations to adopt cleaner technologies or risk losing market access.
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