Raw Material Routes Still Open for Indian Steel Buyers — March 2026 Update

The Hormuz crisis has disrupted global shipping, but not all routes are equally affected. For Indian steel mills and traders, the critical question is: can we still get the raw materials we need? Here’s a route-by-route assessment as of March 2026.

Coking Coal — India’s Most Critical Import

India imports approximately 55–60 million tonnes of coking coal annually, primarily from Australia (which supplies roughly 70–75% of India’s imported coking coal), the United States (10–12%), Mozambique (8–10%), and Canada (5–7%).

Australia to India: This is the lifeline, and it’s operating normally. The shipping route from Queensland and New South Wales coal ports (Hay Point, Dalrymple Bay, Gladstone) to Indian east coast ports (Paradip, Visakhapatnam, Haldia) and west coast ports (Goa, Mumbai) runs entirely through the Indian Ocean, nowhere near the Strait of Hormuz. Freight rates have risen modestly (5–8%) due to general market tightness, but supply continuity is not at risk.

United States to India: US coking coal exports from Hampton Roads and Mobile typically route via the Atlantic Ocean, through the Suez Canal, and across the Indian Ocean to India. While the Suez Canal itself is not affected by the Hormuz closure, the broader Middle East risk zone has caused some vessels to take the longer route around Africa. This adds 7–10 days and modest cost increases of $3–5 per MT, but supply continues.

Mozambique to India: Mozambican coking coal (from the Moatize basin, exported via Beira and Nacala ports) routes directly across the Indian Ocean to India. Completely unaffected by the Hormuz crisis. This route may actually become more attractive as a shorter and risk-free alternative for Indian buyers looking to diversify.

The overall assessment for coking coal is cautiously positive. India’s primary supply routes are intact. However, prices have risen by $10–15 per MT globally due to heightened demand for non-Gulf energy sources, and freight premiums are creeping up even on unaffected routes as global vessel availability tightens.

Iron Ore — Largely Domestic, Minimal Import Dependence

India is the world’s fourth-largest producer of iron ore and is broadly self-sufficient for steelmaking needs. Domestic production runs at approximately 260–280 million tonnes per year, and the steel industry’s consumption is well within this capacity.

The Hormuz crisis has a limited direct impact on India’s iron ore supply. However, there are two indirect effects worth monitoring.

Iran produces roughly 3% of global iron ore. With Iranian exports disrupted, global seaborne iron ore markets are marginally tighter. This may support slightly higher iron ore prices globally, even though India doesn’t import from Iran.

Additionally, India exports iron ore pellets and fines, primarily to China and Japan. If global steel production shifts (e.g., Chinese mills redirect output to replace lost Gulf supply), iron ore demand patterns could shift, affecting Indian domestic pricing.

For now, iron ore supply is not a concern for Indian steel mills. Prices remain range-bound domestically, with NMDC (India’s largest iron ore producer) maintaining stable pricing through the crisis.

Steel Scrap — Mixed Picture

India’s EAF and induction furnace (IF) sector depends heavily on steel scrap, both domestically sourced and imported. India imports approximately 6–8 million tonnes of steel scrap annually.

Middle Eastern scrap (UAE, Saudi Arabia, Bahrain) is significantly disrupted. The Gulf is a major source of HMS (Heavy Melting Scrap) and shredded scrap for Indian buyers. With Hormuz effectively closed, scrap shipments from Gulf ports have halted. Vessels already loaded are either stranded or being rerouted at substantial additional cost.

European scrap (UK, Turkey, continental Europe) continues to flow, though route adjustments may be needed if vessels were previously transiting the Suez and wider Middle East zone. Turkish scrap, a significant source for Indian buyers, ships via the Mediterranean and Suez Canal — currently operational but under elevated risk premiums.

US scrap (east coast) routes via the Atlantic and either Suez or Cape of Good Hope. Supply continues but at higher freight costs.

The scrap market is where Indian buyers may feel the most acute pressure. Domestic scrap prices have already risen by ₹1,500–2,000 per MT since the crisis began, as competition for available domestic supply has intensified.

LNG and Natural Gas — High Concern

While not a “raw material” for steel in the traditional sense, natural gas is increasingly important for India’s DRI (Direct Reduced Iron) producers, which account for a significant share of India’s total steel production. India imports approximately 53% of its LNG from Gulf producers, primarily Qatar.

Qatar’s LNG facilities were hit by Iranian drone strikes early in the crisis, and force majeure has been declared on gas contracts. This is a serious supply risk for Indian DRI producers who rely on piped natural gas derived from imported LNG.

If LNG supply remains disrupted for more than 2–3 weeks, DRI-based steel production in Gujarat and other gas-dependent states could face curtailment, further tightening domestic steel supply and supporting higher prices.

Practical Recommendations

For mill operators: your coking coal supply is secure via Australia and Mozambique, but negotiate now and lock in contracts before global prices rise further. Monitor LNG supply closely if you operate DRI facilities.

For scrap-based producers: diversify sourcing away from the Gulf immediately. Look at European and US origins, and increase domestic scrap procurement. Expect higher scrap costs for the next 4–8 weeks minimum.

For traders: the scrap price increase is a leading indicator for finished steel prices. If scrap costs remain elevated, EAF and IF producers will maintain upward price pressure on TMT bars and other long products.

We’ll continue updating this assessment as the situation evolves. Use SteelMath’s daily brief to stay informed on route changes and supply developments. Subscribe to our free daily email to get updates delivered to your inbox every morning.