India’s steel demand is projected to grow by 8% in fiscal year 2026, putting downward pressure on domestic hot-rolled coil prices

Rating agency ICRA stated on Wednesday that while domestic steel demand in India is projected to grow by approximately 8% in fiscal year 2025-2026 (April 2025 - March 2026), supported by stable consumption in the infrastructure and construction sectors, weak prices are likely to continue to put pressure on the industry's profitability.

In its latest report, ICRA projects that the steel industry's operating margin will remain roughly flat at around 12.5% in fiscal year 2025-2026, lower than previously expected improvements. M100-23P Grain oriented electrical steel, The agency noted that new supply entering the market has created a temporary surplus, leading to continued downward pressure on steel prices.

After rising to approximately 52,850 rupees/ton in April 2025 due to safeguard duties, domestic hot-rolled coil prices retreated to nearly 46,000 rupees/ton in November, and are currently trading below import parity.

In the first seven months of the 2025-2026 fiscal year, the average export price of Chinese hot-rolled coil was approximately US$465 per ton, lower than US$496 in the same period last year. M100-23P Grain oriented electrical steel, Although India's finished steel imports declined by approximately 33% year-on-year this fiscal year, the ICRA emphasized that maintaining safeguard duties is crucial to preventing a massive influx of imports.

ICRA projects that the average price of domestic hot-rolled coil will be around INR 50,500/tonne in fiscal year 2025-2026, with an estimated operating profit of US$108 per tonne, slightly lower than the previous fiscal year. M100-23P Grain oriented electrical steel, The agency maintains a "stable" outlook for the industry.

The report also warns that the massive capacity expansion of 80-85 million tonnes planned between fiscal years 2025-2026 and 2030-2031 could put pressure on corporate balance sheets if profitability fails to improve. Regarding green steel, ICRA believes its demand share may increase significantly by fiscal year 2050, but high costs will remain a major challenge in the short to medium term.