Coal's forgotten cousin wakes up

Metallurgical coal prices jumped from $224 to $282 per tonne in weeks, with listed coal equities up 25%. The market is finally recognizing what has been true for years: coking coal is structurally indispensable.

“Metallurgical coal is structurally indispensable, and the world simply doesn't have enough of it.”

Not thermal coal. Something different.

Metallurgical coal is not burned for power. It goes into blast furnaces with iron ore and becomes coke, which reduces iron to metal. There is no substitute at scale for making steel.

“If you want steel, and the world wants a great deal more steel, you need metallurgical coal.”

India's steel ambition is massive

India's National Steel Policy targets 300 million tonnes of crude steel capacity by 2030, roughly double current levels. Blast furnace construction is already underway across five states.

Coking coal demand will surge

India's blast furnace capacity will rise from 99 million tonnes annually in 2025 to 197 million by 2030. This translates to roughly 78 million additional tonnes of coking coal demand once those furnaces run at full capacity.

India imports most of its coal

India currently imports 85% of its coking coal. The policy goal is to reduce that to 65% by 2030 through domestic processing, but absolute import volumes will still rise because demand is growing faster than domestic supply.

Supply cannot keep up

Years of ESG-driven capital starvation, permitting delays, and geological depletion in Australian basins have left seaborne coking coal markets thin. Diesel cost inflation in Appalachia and Australia worsens the problem.

The setup favors higher prices

Fast-growing structural demand against supply that takes years to expand is the classic recipe for sustained price increases. This is not a short-covering bounce in an unloved sector, but a genuine repricing of supply-demand mismatch.

“It is a repricing of a genuine structural mismatch between where steel demand is heading, particularly in India, and where metallurgical coal supply actually is.”

US producers offer direct exposure

Alpha Metallurgical Resources and Warrior Met Coal are low-cost, high-quality US producers with operating leverage to rising prices. Both have already surged this month but remain cheap relative to where coking coal pricing is heading.

Clinch Resources is the top pick

Clinch Resources is bringing new North American coking coal supply online at exactly the right moment. Production will climb from under 400,000 clean tons in fiscal 2025-2026 to roughly 2 million by 2027. Fair value estimates range from C$2.50 to C$3.90 against a current price of C$1.05.