 |
| Coaltrans Asia 2025 conference |
Crude Steel Production Declines, Impacting Coking Coal Demand
At the Coaltrans Asia 2025 conference in Bali, key industry players gathered to discuss the challenges shaping the coking coal market. Global crude steel production, for the first seven months of 2025, reached 1.09 billion tonnes, marking a 1.9% year-on-year decline. This reduction is a major factor in the softened demand for coking coal, a key input for steel production.
Among the top producers, China’s crude steel production dropped by 3.1%, while India’s output increased by 9.8%. The decline in steel production across major markets such as Japan, Russia, and Europe contributed to a decrease in coking coal imports. The U.S. and India, however, showed growth, bolstering the long-term demand for coking coal in these regions.
The overall steelmaking coal market is tightening due to a mismatch between demand and new supply growth. This trend is particularly noticeable in India and Southeast Asia, where the increasing investment in blast furnace technology ensures the continued reliance on coking coal for steelmaking.
Green Steel Shift Progressing Slowly, Coking Coal Remains Crucial
The global shift to low-carbon steelmaking technologies is still in its early stages. While European nations are working toward green steel, the transition is happening much slower than anticipated. The delay in commercializing low-carbon steel technologies suggests that demand for traditional coking coal in Europe will remain stable in the near term.
India and Southeast Asia’s investments in steel capacity expansion are expected to keep coking coal demand high. India’s crude steel production capacity is projected to grow from 190 million tonnes to 300 million tonnes by 2031, and further to 500 million tonnes by 2050. Southeast Asia’s crude steel production, currently at 71.9 million tonnes, is expected to grow by 40-50 million tonnes over the next five years.
The slow pace of the green steel shift further solidifies the demand for coking coal, as the reliance on traditional blast furnace technology remains widespread across the globe. This trend is especially prominent in developing nations like India, where per capita steel consumption is still far below the global average.
Rising Chinese Coal Exports Face Transport and Policy Barriers
China's coking coal exports have increased significantly in 2025, with a 65% year-on-year rise in exports by mid-year. However, China’s coking coal exports still face major logistical and policy barriers. The central and western regions of China, where most of its coal production is located, pose significant overland transportation challenges. As a result, Chinese coal remains less competitive compared to international seaborne coal.
Despite this, China’s coal export policy is unlikely to change significantly. Coal exports contribute very little to China’s total export value, making it less likely for the government to prioritize increased coal exports. With global demand for seaborne coal rising, however, the continued limited export volume from China is expected to maintain upward pressure on coal prices.
In conclusion, while there are several dynamics at play in the coking coal market, the demand for this critical resource remains steady, particularly in regions investing in steel production capacity. At the same time, the slow pace of green steel development and ongoing geopolitical tensions will continue to influence both supply and demand in the coming years.
ScrapInsight Commentary
The global coking coal market faces a complex intersection of geopolitical tensions and slow green steel adoption. With supply-side challenges mounting and demand holding steady, market participants should expect continued pressure on coal prices through the mid-2020s. The limited expansion in Chinese coal exports, due to domestic policy and transportation issues, further tightens global supply.
