The global coking coal market is expected to experience an oversupply in 2026, driven by declining steel production and sluggish import demand, according to a report from investment bank Macquarie.

The report also highlights that modest increases in Mongolian coking coal supply could further weigh on seaborne supply.

Despite a bearish long-term outlook, short-term risks are likely to stimulate coal prices, resulting in periodic surges. Weather-related disruptions, in particular, may lead to traditional seasonal price hikes in the first quarter of this year.

Cyclones and an abnormal rainy season could restrict Australia's coal exports. The report points out that recent higher-than-average precipitation has already contributed to slower production and logistical challenges. With limited resilience in coking coal supply, such disruptions could trigger a sudden price surge.

Looking ahead, Macquarie expected global coking coal output to remain flat compared to 2025 in 2026. However, a high base may lead to a year-on-year decline in the first half of the year, with potential growth in the second half.