India’s steel industry is encountering a growing input-side challenge as restrictions on metallurgical coke imports begin to materially inflate production costs. A recent assessment by the Global Trade Research Initiative (GTRI) highlights how a combination of safeguard duties, quantitative restrictions and anti-dumping measures is creating unintended pressure on steelmakers at a time when capacity expansion and global competitiveness remain key policy priorities.
Why Metallurgical Coke Matters
Metallurgical coke is a critical raw material in the blast furnace–basic oxygen furnace route of steelmaking, accounting for nearly 35–40 percent of total production costs. India’s domestic coal reserves are largely high in ash content, making imported low-ash coke essential for efficient and cost-competitive steel production.
Over the past two years, policy interventions aimed at protecting domestic coke producers have tightened import availability. These include safeguard duties introduced in 2023, quantitative restrictions effective from January 2025 and provisional anti-dumping duties imposed more recently. Collectively, these measures have reduced supply flexibility and raised landed costs for steel producers.
Supply Constraints and Cost Inflation
The impact is already visible across the sector. In the first half of 2025, steelmakers were able to secure only about half of their metallurgical coke requirement through imports, leading to shortages and rising spot prices. Even moderate increases in coke prices translate into disproportionately higher steelmaking costs, putting pressure on margins.
An additional concern is the methodology used in recent anti-dumping investigations, where freight costs were benchmarked using containerised shipping rates rather than dry bulk cargo, the standard transport mode for metallurgical coke. This has further inflated assessed landed costs and duty burdens.
Key Data Snapshot: Metallurgical Coke and Steel Cost Impact
| Parameter | Indicative Data |
|---|---|
| Share of metallurgical coke in BF-BOF steel cost | 35–40% |
| Typical ash content of domestic Indian coke | 14–15% |
| Preferred ash content for efficient BF operations | Below 10% |
| H1 2025 met coke import availability | ~1.5 million tonnes |
| Estimated H1 2025 import requirement | Over 3.0 million tonnes |
| Impact of 20–25% rise in coke prices | 3–5% increase in finished steel cost |
| Primary steel route most affected | Blast Furnace – BOF |
| Least affected steel route | Electric Arc Furnace (EAF) |
Route-wise Cost Sensitivity: BF-BOF vs EAF
| Parameter | BF-BOF Route | EAF Route |
|---|---|---|
| Primary raw material dependence | Metallurgical coke and iron ore | Scrap steel / DRI |
| Exposure to metallurgical coke price volatility | High | Minimal |
| Share of coke in total production cost | 35–40% | Negligible |
| Sensitivity to coke import restrictions | Very High | Low |
| Impact of 20–25% rise in coke prices | 3–5% increase in steel cost | Marginal or nil |
| Energy consumption profile | Coke and coal intensive | Electricity intensive |
| Flexibility in raw material sourcing | Limited | High |
| Operating cost stability under policy shocks | Low | Relatively high |
| Export competitiveness during input disruptions | Weakens sharply | More resilient |
| Strategic positioning in current policy environment | Constrained | Favoured |
Note: Data ranges are indicative, based on industry estimates, GTRI commentary and Metalsbuy market analysis.
Operational and Downstream Implications
Restricted access to quality metallurgical coke affects more than just costs. It reduces blast furnace efficiency, increases coke consumption rates, raises energy usage and contributes to higher maintenance downtime. These operational inefficiencies add structural pressure on steel producers already navigating weak global demand and rising compliance costs.
Downstream segments such as secondary steel producers, foundries and ferro-alloy manufacturers are particularly exposed. With limited ability to pass on higher costs, these industries absorb margin pressure, which ultimately flows into infrastructure, engineering and automotive value chains.
Policy Misalignment at a Critical Juncture
The core issue highlighted by GTRI is one of policy misalignment. While the intent is to protect domestic coke producers, restricting a critical input undermines the competitiveness of the steel sector itself. Input-side protection without adequate domestic capacity or quality substitution risks weakening the very industry it aims to support.
This contradiction becomes more pronounced as India positions itself as a global steel manufacturing hub, with ambitious capacity expansion and export growth targets.
Metalsbuy Outlook
From a Metalsbuy perspective, the current metallurgical coke import regime has clear market and strategic implications:
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Upward Pressure on Steel Costs: Continued constraints on coke imports are likely to keep the cost curve elevated for blast furnace-based producers, supporting firmer domestic steel prices despite uneven demand.
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Export Competitiveness at Risk: Higher input costs could erode India’s export competitiveness, especially against producers in regions with easier access to low-ash coke.
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Supply Chain Reorientation: Steelmakers and traders are expected to prioritise long-term sourcing arrangements and diversify import origins to mitigate quota and duty risks.
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Structural Shift in Steelmaking: Persistent input volatility may accelerate efficiency upgrades, greater reliance on alternative sourcing strategies and a gradual shift toward EAF-based capacity where scrap and power economics allow.
The Road Ahead
As quantitative restrictions approach their review window, recalibrating metallurgical coke import policy will be critical. Aligning raw material availability with steel sector growth objectives can help prevent cost inflation, operational disruptions and erosion of global competitiveness.
The broader takeaway is clear: sustainable growth of India’s steel industry requires coherent policies that balance domestic protection with uninterrupted access to critical raw materials.