India is planning to increase its imports of coking coal, a crucial component in steel manufacturing, from Russia. This decision comes in response to a decline in shipments from Australia, which is the primary supplier, and the challenges faced by steel mills dealing with escalating prices.

The steel mills in India, the second-largest producer of crude steel globally, have been grappling with inconsistent supplies of coking coal from Australia. Typically, Australia contributes more than half of India's annual imports of approximately 70 million tonnes. The situation worsened last month when prices for Australian coking coal surged by 50%, exceeding $ 350 per metric tonne. This spike was attributed to factors such as maintenance outages, reduced supplies from Queensland, and a sluggish train network.

In response to the concerns raised by India, Australia reassured the country of a consistent supply of the commodity earlier this month. However, India is actively seeking alternatives to reduce its dependence on Australia and diversify its import sources.

In the preceding year, India's steel mills attempted to increase their coking coal imports from Russia. Unfortunately, the stringent economic sanctions imposed on Moscow due to the conflict in Ukraine adversely impacted the supply of Russian coking coal to Indian mills.

Despite these challenges, there has been progress in smoothening payment mechanisms between Indian buyers and Russian suppliers. As a result, India's steel mills are expected to boost their coking coal supplies from Russia.

Russian coking coal shipments are currently more cost-effective than those from Australia. Furthermore, some Russian suppliers are willing to offer discounts on their prices.