Coking coal, which turns iron ore into steel, has cooled after a summer spike but remains far dearer than a year ago. The benchmark stood at US$266 a tonne on 15 October, unchanged on the day. It is up 21.74 per cent this year and 36.41 per cent on a year earlier.

The rally has been driven by supply rather than demand. A mine explosion in China and wet weather in Queensland tightened a well-supplied market. For Australia, the largest seaborne exporter, higher prices have arrived alongside a reshaping of who owns the Bowen Basin.

What the benchmark measures

Market screens track premium hard coking coal shipped from Queensland, quoted in US dollars per tonne. Coking coal is baked into coke, which fuels blast furnaces and strips oxygen from iron ore. It trades at a premium to thermal coal, which is burned for power.

Australia dominates seaborne supply. Its exports reached 114.03 million tonnes in the first nine months of 2026, up 4.5 per cent, IndexBox reported, citing BigMint data.

What drove the 2026 rally

The year opened with an Australian squeeze. Heavy rain caused outages and force majeure declarations. Premium low-volatile coking coal hit a 17-month high of US$240.55 a tonne on 21 January.

The larger shock came from China. A gas explosion on 23 May at the Liushenyu mine in Shanxi province killed more than 80 people. Within days, 109 Shanxi coking coal mines with 122 million tonnes of annual capacity had halted, according to a Mysteel survey cited by Caixin.

The effect built through the summer. Dalian coking coal futures were on course for a record 46 per cent monthly gain in August, citing Bloomberg data. The International Energy Agency (IEA) said Australian hard coking coal reached US$245 a tonne in July, about 30 per cent above 2025 levels.

This month's move

Prices have drifted since late summer. Dalian coking coal futures hit a two-year high of 1,729 yuan (US$258) a tonne on 31 August, then fell 12 per cent. Seaborne coal stood at US$265.50 on 24 September, supported by wet weather at Australian ports, Shanghai Metals Market said.

The benchmark fell 2.56 per cent over the past month and 0.37 per cent in the past week. Shanghai Metals Market attributed the softness to constrained blast furnace output across the Northern Hemisphere.

Global demand

China's shortage may not be over. Bloomberg Intelligence expects Shanxi supply to recover steadily in the fourth quarter, but full normalisation may slip to the first half of 2027. A Mysteel survey on 16 September found 75 coking coal mines still shut in Shanxi.

Chinese buyers have turned to imports. Australian exports to China more than doubled in September to 3.34 million tonnes, IndexBox reported. Japan took 3.06 million tonnes, up 14.6 per cent.

Steelmakers, however, are under strain. China's crude steel output fell 2.9 per cent in the first nine months, official data show. Wood Mackenzie's Simon Wu said only about 7 per cent of Chinese mills were profitable in September.

The Australian angle

The largest Queensland producer is the BHP Mitsubishi Alliance (BMA). BHP's share of output rose 3 per cent to 18.6 million tonnes in the year to June. Its realised price rose 8 per cent to US$210.21 a tonne, and BHP guides 18.5–20.5 million tonnes for 2026-27.

Ownership is shifting. In May, Anglo American agreed to sell its Queensland steelmaking coal mines to Dhilmar for up to A$5.43 billion, including Moranbah North and Grosvenor, the ABC reported. An earlier sale to Peabody collapsed after a fire at Moranbah North.

Queensland royalties remain contentious. In 2025, BMA blamed weak prices and the state's royalty scheme when it announced the closure of its Saraji South mine.

Metric

Value

Price (USD/T)

266.00

Daily change

0.00 (0.00%)

Weekly change

-0.37%

Monthly change

-2.56%

Year to date

+21.74%

Year on year

+36.41%

Price date

15 October 2026