Metallurgical coal prices may exceed USD2,000 per ton in the second half of 2025, as projected by an analyst from an investment bank. Australian coal exporters are anticipated to benefit from both increased prices and volumes.
This change is driven by coal tariffs on US coal, following China’s recent imposition of a 15% tariff on US coking coal. As a result, demand is likely to shift towards Australian coal, further supported by rising demand from India linked to increased steel production.
Current Market Prices
Currently, the price for Australian prime hard coking coal stands at approximately USD183 per ton.
Should metallurgical coal prices reach or surpass USD2,000 per ton in late 2025, the implications for global markets would be extensive. A forecast of such levels suggests major shifts in supply chains and pricing power among key exporters. Australian suppliers, in particular, stand to gain, with both higher prices and increased shipment volumes expected.
China’s decision to impose a 15% tariff on US-origin coking coal has already started to rearrange trade flows. A reduction in American coal exports to China would leave Australian producers in a stronger position. Given China’s vast requirement for steel-making coal, the likelihood of it relying more on Australian shipments has increased. Supply constraints from competing exporters could amplify this further.
India’s rising steel production provides another layer of support for stronger prices. Higher steel output naturally translates to greater demand for metallurgical coal, underpinning an already tight market. In recent years, India’s infrastructure and industrial expansion have driven a steady increase in coal consumption. If current trends persist, Australian suppliers would be well-positioned to capture much of this rising demand, particularly if pricing remains competitive compared to alternative sources.
Potential Market Impact
The present market price of Australian prime hard coking coal, standing at roughly USD183 per ton, places current valuations far below the projected levels. If the anticipated surge materialises, it would reflect an increase of over tenfold. Such a shift would be driven by a combination of policy-induced trade adjustments, expanding steel production in key markets, and potential constraints on alternative sources of supply.
Market participants will need to watch regional policy shifts, particularly those affecting trade flows between major exporters and consumers. US producers, dealing with the newly applied tariff, may seek alternative buyers, altering availability in other parts of the world. Meanwhile, shifts in Chinese policy—whether through additional trade measures or adjustments in domestic coal supply—could alter expectations at short notice.
Those engaged in price-sensitive strategies will have to assess volatility risks carefully. A move from current levels to the projected range would not occur in isolation—it would likely feature sharp price movements driven by shifting fundamentals. Contracts, hedging approaches, and supply agreements will require careful positioning to navigate possible price instability.
If prices were to edge closer toward the predicted values, the consequences for steel producers and broader industrial sectors would extend beyond direct raw material costs. Higher input prices affect production costs, which in turn influence downstream industries reliant on steel—including construction, automotive manufacturing, and infrastructure development. A sustained rise would shift procurement strategies, possibly accelerating trends toward alternative materials where feasible.
Global trade balances in steel-making coal continue to pivot, shaped by government policies, supply fundamentals, and industrial expansion in Asia. While the longer-term trajectory will depend on multiple variables, price-sensitive participants would do well to adjust to these shifting conditions with an approach informed by policy assessments, trade developments, and industrial growth expectations worldwide.
