Will Steel Demand in India Rise by 8% in FY26?
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Synopsis
Steel demand in India is on track for an 8% growth, with projections indicating an additional 11-12 million tonnes needed for FY26. However, the industry faces challenges from price dips and increased supply, putting pressure on producers. Discover the implications of these trends in this insightful report.
Key Takeaways
- Steel demand in India is projected to grow by 8% in FY26.
- Incremental demand of 11-12 million tonnes expected annually.
- Challenges from declining steel prices and increased supply.
- Operating margins expected to remain flat at 12.5%.
- New capacity addition plans may face risks of slowdown.
New Delhi, Dec 17 (NationPress) The growth in steel demand across India is anticipated to remain stable at approximately 8 percent for the fiscal year 2026, resulting in an additional demand of 11-12 million tonnes per annum (mtpa), as reported on Wednesday.
Nonetheless, declining steel prices and increased supply may present challenges for local steel manufacturers, according to a report from the ratings agency ICRA.
The agency projected that the operating conditions for domestic steel producers will remain tough over the next quarters, primarily due to persistent but stable input costs and a sluggish external market.
Furthermore, the report indicated that new capacity additions of 80-85 million tonnes (mt), with investments ranging from $45-50 billion over FY2026-2031, could face potential delays.
ICRA also mentioned that the operating margins of the domestic steel industry for FY26 are expected to stay unchanged at 12.5 percent.
The industry's leverage (TD/OPBDITA) is expected to be 3.4 times in FY26, compared to an estimate of 3.1 times from August 2025 and 3.5 times reported in FY25.
The domestic steel sector has witnessed a remarkable capacity increase of 15 million tonnes (mt) over the last three to four quarters, with an additional 5 mt expected by the end of the fiscal year, as stated by Girishkumar Kadam, Senior Vice-President & Group Head, Corporate Sector Ratings at ICRA.
Current Domestic Hot Rolled Coil (HRC) prices are trading below import parity, reflecting ongoing supply-side pressures, according to Kadam.
For FY26, domestic HRC prices are projected to average Rs. 50,500 per tonne, as indicated by ICRA.
Due to increased supply, domestic HRC prices surged to Rs. 52,850 per tonne in April 2025, only to fall to Rs. 46,000 per tonne by November 2025 following the implementation of a 12 percent Safeguard Duty (SGD).
Moreover, record-high steel exports from China and weak global consumption are hindering domestic producers from raising steel prices.
The report cautioned that rising trade barriers in the US and EU could redirect surplus global steel towards rapidly growing markets like India, emphasizing the need for maintaining the Safeguard Duty.
Point of View
I believe it's crucial to acknowledge the steady growth forecast for India's steel demand. While the projected 8% increase signals robust industrial activity, the challenges posed by pricing pressures and supply fluctuations must be addressed to safeguard our domestic producers' interests. The government's ongoing support through policies like the Safeguard Duty will be vital in navigating these complexities.
NationPress
18/12/2025
Frequently Asked Questions
What is the projected growth for steel demand in India for FY26?
Steel demand in India is expected to grow by approximately 8% for FY26, translating to an additional demand of 11-12 million tonnes per annum.
What challenges are domestic steel producers facing?
Domestic steel producers are facing challenges from lower steel prices, increased supply, and a tough operating environment due to stable input costs and weak external markets.
What are the expected domestic HRC prices for FY26?
The average domestic Hot Rolled Coil (HRC) prices for FY26 are projected to be around Rs. 50,500 per tonne.
How much capacity addition is expected in the steel industry?
The steel industry is expected to add 80-85 million tonnes of new capacity, requiring investments of $45-50 billion over the period from FY2026 to FY2031.
What is the significance of the Safeguard Duty?
The Safeguard Duty is essential for protecting the domestic steel industry against external competition and ensuring price stability amidst global market fluctuations.
