Steely resolve under pressure

Buoyant demand has failed to push steel prices amid an increase in production and imports, threatening to slow expansion plans and limit companies’ ability to reinvest in capacity addition

- ISHITA AYAN DUTT

The Indian steel industry is faced with a paradox: Rising demand and falling prices.

Demand continues to surge as user industries gather pace, with the World Steel Association projecting around 9 per cent annual growth for India over 2025 and 2026, the year domestic demand is projected to be almost 75 million tonnes (mt) higher than in 2020.

Major producers are pouring billions of dollars in ambitious capacity expansion. But as new supply comes on stream and global trade flows tighten, steel prices and demand are beginning to move out of sync — a sign that the next chapter in India’s steel story may depend as much on balance sheets as on blast furnaces.

The stickiness is attributed to a combination of increased supplies, imports (down but still a concern), and limited trade opportunities.

At an event on November 4, Steel Secretary Sandeep Poundrik acknowledged that prices remain a significant challenge. He said, around 150 small steel producers have halted production amid depressed market conditions. “Price is a problem, especially when we need to invest in 100 million tonnes of capacity in the next maybe five to seven years,” he said.

As steelmakers push the growth pedal, the question resurfacing is: Do current levels of margins justify the mega expansion plans?

The slip

Domestic flat steel prices started rising in the last week of December 2024 in anticipation of the Indian safeguard duty. The trend continued until early May 2025, with prices increasing by ₹4,500-5,000 per tonne during the period.