Archive · 18 Dec 2025
Indian Steel Industry Faces Challenges
Indian steel exports grew a lot in October, but now they are expected to slow down.
This is because buyers in Europe bought a lot of steel to prepare for a new tax, but now they are not ordering as much.
The Indian steel industry is facing problems like falling steel prices and higher costs for materials like coking coal.
The global steel market is also struggling, with production dropping in many places, including China.
India has tried to protect its industry by making it harder to import steel, but the combination of low demand at home and fewer orders from Europe is making things tough for Indian steel makers.
Additionally, SAIL, a major Indian steel company, is expected to face even more challenges due to oversupply, rising costs, and increased debt from expansion projects.
Indian steel exports grew by 83% in October to 0.73 million tonnes, but are expected to slow down due to weakening global demand.
Steel production in India grew by 6% in October to 13.6 million tonnes, but prices for hot-rolled coil (HRC) dropped to ₹46,750 per tonne in November.
Raw material costs, such as coking coal, increased by 7%, putting pressure on steel companies' profits.
Global steel production fell by 6% in October, with China seeing a 12% drop in production.
India has implemented measures to protect its steel industry, including higher import duties, but the combination of slow domestic demand and fewer European orders is expected to keep pressure on Indian steel makers.
SAIL's earnings are expected to be significantly impacted by weak steel margins and oversupply in the flat steel segment over FY26–28.
SAIL's return on equity (RoE) is projected to be 3.2% in FY26E, improving to 6.4% and 6.5% in FY27E and FY28E, respectively.
SAIL's Ebitda is expected to fall by around 30% quarter-on-quarter in Q3FY26, with Ebitda per tonne potentially dropping to around Rs 2,100.
SAIL's capex for the 4.5 mtpa IISCO expansion is estimated at Rs 33,000 crore, with commissioning expected by FY30E.
SAIL's net debt is projected to climb to about Rs 37,400 crore by end-FY28, taking net debt-to-Ebitda to 2.8 times.
- Who
- Indian steel industry, particularly SAIL
- What
- Challenges due to weak steel margins, oversupply, and rising input costs
- When
- Expected to impact FY26–28, with immediate effects seen in Q3FY26
- Where
- India, with global implications
- Why
- Oversupply in flat steel, weak domestic and international demand, rising coking coal prices, and increased capital expenditure
- Export Growth
- 83% in October
- Export Volume
- 0.73 million tonnes in October
- Steel Production Growth
- 6% in October
- Steel Production Volume
- 13.6 million tonnes in October
- HRC Price
- ₹46,750 per tonne in November
- Coking Coal Price Increase
- 7%
- Global Steel Production Decline
- 6% in October
- China's Steel Production Decline
- 12% in October
- SAIL's RoE
- 3.2% in FY26E, improving to 6.4% and 6.5% in FY27E and FY28E
- SAIL's Ebitda Decline
- Around 30% quarter-on-quarter in Q3FY26
- SAIL's Ebitda per Tonne
- Rs 3,700 in Q3FY26, potentially dropping to Rs 2,100
- SAIL's Capex
- Rs 33,000 crore for IISCO expansion
- SAIL's Net Debt
- Rs 37,400 crore by end-FY28
- SAIL's Net Debt-to-Ebitda
- 2.8 times by end-FY28
