A sharp spike in coal and iron ore costs is rippling through the global metals chain, triggering a cost-led rally in aluminium and steel even as demand fundamentals remain weak, highlighting a widening disconnect between prices and underlying demand.
At the heart of the current upcycle is a surge in mining-linked input costs. South African non-coking coal prices jumped ~14% month-on-month (MoM) and ~21% year-on-year (YoY), driven by higher freight rates and supply constraints, while Australian coking coal, despite a ~8% MoM decline, remains elevated at ~30% above year-ago levels, keeping cost pressures intact across the value chain.
According to a Centrum Institutional Research report, the ongoing price momentum across metals is largely cost-driven, with “pricing strong amid mixed cost trends,” even as global demand remains under pressure.
Iron ore markets have also firmed up, with Australian ore prices rising ~6% MoM and ~4% YoY, while domestic miner NMDC increased lump ore prices by ₹500 per tonne and fines by ₹450 per tonne in April over March, reinforcing the uptrend in mining realisations and input costs.
The impact of rising mining costs is now visible across metals. Aluminium has emerged as the standout performer, with prices rising ~10% MoM and ~27% YoY to $3,373 per tonne, before climbing further to $3,619 per tonne, reflecting strong price momentum.
Divergent Trends
In contrast, the broader base metals basket continues to show mixed trends. Copper declined ~3% MoM, zinc fell ~4% MoM, lead slipped ~2% MoM, and nickel eased ~1% MoM, underscoring that the rally is selective and not demand-led.
Steel prices, however, have moved up sharply as producers pass on higher input costs. Domestic hot rolled coil (HRC) prices increased ~6% MoM and ~12% YoY, while primary rebar prices rose ~2% MoM and ~8% YoY, signalling a firm pricing environment despite weak demand trends.
Globally, the trend remains consistent, with China’s HRC export prices rising ~2% MoM, and US and European prices gaining ~4% MoM each, indicating a synchronised, cost-led price recovery across major markets.
“Steel prices have rallied sharply across regions,” the report said, attributing the increase to higher raw material costs, reduced imports and increased trader purchases amid geopolitical volatility.
China vs. India
Despite firm pricing, demand conditions remain fragile. “Global steel demand outlook is likely to remain soft in the near term,” the report noted, with demand growth projected at just 0.3% in CY26, before improving to 2.2% in CY27.
China, the world’s largest steel consumer, is expected to see demand decline 1.5% YoY in CY26, reflecting structural weakness in construction and infrastructure activity. India, however, continues to stand out, with demand projected to grow 7.4% in CY26 and 9.2% in CY27.
Production trends reflect this divergence. Global crude steel output stood at ~141.8 million tonne in February 2026, down ~2% YoY and ~4% MoM, with China’s production falling ~4% YoY.
India, in contrast, recorded production of ~13.6 million tonne, up ~7% YoY, reinforcing its position as a key growth engine in the global metals and mining landscape.