Global Coking Coal Market Faces Short-Term Volatility Amid China Safety Inspections and India Demand

The global coking coal market is anticipated to experience short-term volatility, driven by a combination of declining steel production, price cuts, and stringent mine safety inspections in China. According to analysts, these conflicting factors will keep the commodity range-bound with wide fluctuations, despite futures having risen by 18 percent within a single week.

Market participants note that the market currently lacks a clear directional trend. China's commodity data group Sunsirs stated that strict regulatory oversight remains a primary factor influencing supply dynamics.

Supply constraints in China were triggered by an explosion at the Liushenyu coal mine in Shanxi province in late May, which resulted in 82 fatalities. The incident prompted a State Council investigation into mine safety and compliance. Furthermore, China implemented the new Chinese Standards for Determining Major Accident Hazards in Coal Mines on July 1.

Research agency BMI, a unit of Fitch Solutions, noted that these new standards make it harder for Chinese coking coal mines to increase output aggressively. Major producers are shifting toward conservative operating practices, meaning actual output will likely remain below nameplate capacity even as formal operations resume. Consequently, Chinese coke plants are expected to remain active in the seaborne market through the third quarter.

BMI raised its 2026 price forecast for Australian premium hard coking coal by $15 a tonne to $225, reflecting the residual impact of the Liushenyu accident. Prices averaged $227 in the first quarter and $238 in the second quarter, bringing the H1 average to $233. BMI expects prices to ease slightly to an average of $220 in the third quarter and $215 per tonne in the fourth quarter.

On the Dalian Commodity Exchange in China, September contracts were quoted at 1,628.5 Chinese yuan ($242.26) a tonne, while spot prices exceeded 2,150 yuan ($319).

In Shanxi, routine safety oversight continues to restrict output, with 57 mines remaining shut across Lüliang, Linfen, Changzhi, Taiyuan, and Jinzhong, affecting a combined capacity of 72.5 million tonnes. Sunsirs highlighted that extraction intensity is tightly controlled, limiting any overall rebound in domestic production.

At the same time, strong demand from international markets is providing market support. Australia’s Office of the Chief Economist (AOCE) reported that coking coal prices will continue to benefit from continuous demand growth from India. Australian spot prices had previously surged in early 2026 due to weather disruptions and elevated demand from India, peaking at around $250 per tonne in February before easing.

For India, BMI projects crude steel production to rise by 9.3 percent to reach 180 million tonnes in 2026, following a 7.4 percent year-on-year increase in H1 output to 86 million tonnes. India's coking coal imports are expected to climb due to steel capacity additions and limited domestic supplies of high-quality metallurgical coal. Additionally, drier-than-normal monsoon conditions linked to El Niño offer a modest upside risk by reducing construction disruptions in the third quarter.

While weak conditions in China's property sector weigh on steel demand, growth in the manufacturing sector and robust export activity from countries like Mongolia will help balance the global coking coal supply and demand equation moving forward.

"The current volatility in the global coking coal market highlights how regulatory shifts and unexpected supply chain disruptions can heavily influence industrial commodities. For businesses in the manufacturing and steel sectors, managing raw material costs requires close monitoring of regional policies, particularly in key production hubs like China. At the same time, growing demand from emerging markets such as India presents consistent long-term consumption trends that businesses must factor into their operational planning." — Dr. Shishir Gupta, Founder & CEO, StartupLanes