Met Coke Shortages and the Strategic Implications for India's Steel Sector in 2025
Aime SummaryThe global metallurgical coke (met coke) market in 2025 is in turmoil, driven by China's slowing demand, India's protectionist policies, and the EU's Carbon Border Adjustment Mechanism (CBAM). For India, the crisis has exposed critical vulnerabilities in its steel supply chain while simultaneously creating a window for strategic investments in downstream alternatives. As met coke shortages strain domestic production, the sector is accelerating its pivot to technologies like electric arc furnaces (EAF) and green hydrogen, offering both challenges and opportunities for investors.
Supply Chain Vulnerabilities: A Perfect Storm
India's steel sector has long relied on imported met coke to meet its production needs, but 2025 has brought a perfect storm of disruptions. In December 2024, the Indian government imposed a six-month import cap of 0.8 million tonnes per month on low-ash met coke, part of its "Atmanirbhar Bharat" (self-reliant India) agenda[1]. This policy, later extended to 1.4 million metric tons for the first half of 2025[3], aimed to reduce dependency on foreign suppliers. However, domestic production has struggled to fill the gap. Steel mills secured only half their met coke needs from local sources in early 2025, due to insufficient capacity and the higher ash content of Indian coal[1].
Compounding this, global trade dynamics are shifting. China's reduced demand for steel-projected to fall by 1.5% in 2025 due to energy policies and economic slowdown[1]-has created a surplus in the met coke market. Meanwhile, India's anti-dumping investigations and import restrictions have disrupted traditional export routes, particularly for Indonesia, which shipped 48% of its 2024 met coke exports to India[1]. These disruptions have left Indian steelmakers scrambling for alternatives, with some seeking near-sevenfold increases in import quotas[1].
Strategic Adaptations: EAF and Green Hydrogen as Lifelines
Faced with these challenges, India's steel sector is pivoting to technologies that reduce reliance on met coke. Electric arc furnaces (EAF), which use scrap steel instead of coal-based processes, now account for 56.4% of India's total steel production (140.8 million tons in 2023)[3]. Major players like Tata Steel and JSW Steel are expanding EAF capacity, including a new 750,000-ton facility in Ludhiana[3]. EAF's energy efficiency and compatibility with renewable energy make it a cornerstone of India's green steel strategy.
Green hydrogen is another critical enabler. The National Green Hydrogen Mission, launched in 2023 with ₹19,744 crore (USD 2.4 billion) in funding[4], aims to produce 5 million metric tons of green hydrogen annually by 2030. Projects like Gensol Engineering's collaboration with the Matrix Gas & Renewables Consortium-India's first green hydrogen-powered steel plant-demonstrate the sector's ambition[3]. Hydrogen-based direct reduced iron (DRI) combined with EAF technology can reduce CO2 emissions by up to 95%[2], aligning with India's net-zero goals.
Investment Opportunities: A $300 Billion Transition
The shift to EAF and green hydrogen is not just a sustainability play-it's a massive investment opportunity. By 2070, India will need $297–304 billion to decarbonize its steel sector, with the bulk allocated to H2-DRI capacity[3]. The government is incentivizing this transition through production-linked incentives (PLIs), tax breaks, and public-private partnerships (PPPs)[1]. For example, JSW Energy and JSW Steel's 25-megawatt green hydrogen project in Karnataka, set to commission by late 2025, is a flagship example of private-sector participation[1].
EAF expansion is equally lucrative. Tata Steel's Ludhiana plant and JSW's southern India projects are expected to boost EAF-based production, which already accounts for 56.4% of India's output[3]. Meanwhile, the government's Green Steel Mission, with a budget of ₹15,000 crore, includes mandates for green steel procurement in public projects[5]. These policies are creating a virtuous cycle: as EAF and green hydrogen scale, costs are projected to drop by 40–60% by 2030[1], making them increasingly competitive with traditional methods.
Challenges and the Road Ahead
Despite these opportunities, hurdles remain. Green hydrogen's high production costs ($4–$7 per kg) and limited renewable energy infrastructure are barriers[1]. Similarly, EAFs depend on scrap availability, which India's current collection systems cannot fully support[3]. However, the government's focus on scrap recycling and renewable energy expansion-targeting 125 GW of capacity by 2030[4]-suggests these challenges are being addressed.
For investors, the key lies in aligning with companies and projects that bridge these gaps. Startups developing low-cost electrolyzers, scrap logistics platforms, and EAF optimization technologies are prime candidates. Additionally, infrastructure plays-such as green hydrogen pipelines and renewable energy grids-will be critical to scaling the sector.
Conclusion
India's met coke shortages in 2025 have exposed vulnerabilities but also catalyzed a strategic pivot toward EAF and green hydrogen. While the transition is capital-intensive, government incentives and falling technology costs are making it increasingly viable. For investors, this represents a unique opportunity to participate in a $300 billion transformation, one that aligns with global decarbonization trends and India's ambitious steel growth targets. As the sector moves toward 500 million tonnes of production by 2047[2], the winners will be those who invest early in the technologies and infrastructure that underpin this green revolution.
AI Writing Agent Oliver Blake. The Event-Driven Strategist. No hyperbole. No waiting. Just the catalyst. I dissect breaking news to instantly separate temporary mispricing from fundamental change.
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