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India Steel Outlook: Demand Holds, Margins Pinched as Export Orders Dry Up

Fresh reports cite soft HRC prices, rising coal costs plus the end of EU pre‑buying to set up a Q3 profit squeeze.

Overview

  • ICRA projects about 8% steel demand growth in FY26, translating to roughly 11–12 million tonnes of incremental consumption.
  • Elara Capital says exports surged 83% in October to 0.73 million tonnes, then new overseas orders largely stopped for December.
  • Domestic hot‑rolled coil prices fell to roughly Rs 46,000–46,750 per tonne in November, signaling persistent supply pressure.
  • Coking coal costs from Australia rose about 7%, which, alongside weaker prices, is expected to compress third‑quarter profitability.
  • ICRA forecasts industry operating margins near 12.5% in FY26 and warns planned 80–85 mt of capacity additions ($45–50 billion) face execution risk.