Metallurgical Coke Curbs Increase Steel Production Costs

India’s steel industry is witnessing rising production costs, not due to demand-side weakness, but rather due to restricted access to an essential raw material called Low Ash Metallurgical Coke (LAM Coke). As steel plays a crucial role in infrastructure, housing, and manufacturing, any disturbance to its cost structure has a direct impact on the economy.

Table of Contents

Importance of Metallurgical Coke in Steelmaking

Metallurgical coke is an essential input in the Blast Furnace–Basic Oxygen Furnace (BF–BOF) steelmaking route, which still accounts for a significant share of India’s steel production. It performs three necessary functions like
providing heat, acting as a reducing agent, and ensuring furnace permeability and operational stability.
There is currently no large-scale substitute for metallurgical coke in this process.

Why India Depends on Low Ash Coke Imports

Coal Available in India Contains Around 14-15% ash, which makes it inappropriate for producing the high-quality coke required by modern blast furnaces. Low Ash Metallurgical Coke, which has ash below 10% is imported to meet technical requirements. This import dependence is driven by quality limitations, not by preference or cost arbitrage.

Impact of Import Restrictions

According to the Global Trade Research Initiative, metallurgical coke accounts for nearly 35–40% of the total cost of steelmaking under the BF–BOF route. Over the past year, imports of LAM Coke have been affected by quantitative limitations, safeguard measures, and provisional anti-dumping duties.

These steps have constrained supply, increased landing costs, and reduced procurement flexibility for steel producers. As a result, Indian steelmakers are facing higher production costs even when demand is stable.

The Policy Contradiction

The Main concern highlighted by industry experts is the policy mismatch between upstream inputs and downstream protection. Finished steel products benefit from safeguard duties, anti-dumping measures, and Quality Control Orders (QCOs), aimed at protecting domestic manufacturers. At the same time, access to LAM Coke, a non-substitutable upstream input, is capped, restricted, and taxed.

This contradiction places domestic steel producers at a structural disadvantage, increasing costs while expecting global competitiveness.

Why This Matters for the Steel Industry

How Metallurgical Coke Shortage Affects the Steel Value Chain

Higher input costs put upward pressure on steel prices
Producer margins come under stress
Export competitiveness weakens
Long-term capacity expansion plans may be affected

Given India’s infrastructure and manufacturing goals, sustained input-side troubles could slow momentum across multiple sectors.

The Way Forward

For India’s steel ambitions to remain globally competitive, the raw-material access policy must align with downstream protection and capacity expansion goals. While supporting domestic coke producers is important, steelmakers also need reliable and sufficient access to essential raw materials.

Steel production will remain cost-efficient only if imports are managed realistically and domestic coke quality improves together.

In Conclusion

Steel costs in India are increasing mainly due to supply constraints on metallurgical coke. Clear and coordinated policies are needed to support the sector’s long-term growth.