Supply issues have been tightening the Chinese coking coal market for months, pushing the price of the key steelmaking raw material a record 46% in August alone, the biggest surge on record.

Coking coal futures on China’s Dalian exchange were rising by 6% on Monday afternoon local time amid persistent supply issues following the mining disaster in May and increased safety checks on other Chinese mines.

But more importantly, the futures were on track to post a record-setting 46% monthly surge, the biggest on record since the Dalian coking coal futures began trading in 2013, data compiled by Bloomberg showed.

The price rally in August is eclipsing the previous record for a monthly jump, of 38% back in July 2025.

The surge in coking coal prices has spilled outside China. Steelmakers in India, the world’s second-largest steelmaker after China, have seen a squeeze in their margins due to the rallying input prices.

India relies on imports for as much as 95% of its coking coal, or metallurgical coal, demand. Metallurgical coal is a grade of coal that is one of the essential raw materials in the steelmaking process. Also known as met coal, this type of coal contains more carbon, less ash and less moisture than thermal coal, which is used for electricity generation.

The price of premium coking coal freight on board (FOB) in Australia surged by 25% in the first seven months of this year compared to last year due to a series of supply disruptions.

The price increase has been the result of slower ramp-up of new mines, higher prices due to the Iran war, supply disruptions at key producer Australia, and the deadly coal mine explosion in China’s Shanxi province that killed more than 80 people in the worst Chinese mining accident in years.

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“Steelmaking coal prices strengthened from CY2025 levels as strong Indian import demand and supply disruptions tightened an otherwise balanced seaborne market,” mining giant BHP said in its Economic and commodity outlook earlier this month.

By Michael Kern for Oilprice.com

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