Archive · 19 Dec 2025
Tata Steel and SAIL face margin squeeze
Tata Steel and SAIL, two big companies in India's steel industry, are having a tough time.
The price of steel has gone down, but the cost of making it has gone up.
This is squeezing their profits.
There's also too much steel being made compared to what people need, which makes it hard to raise prices.
Tata Steel will also have to buy more iron ore at higher prices after 2030 because their current supplies will run out.
Meanwhile, other countries are making steel in cleaner ways, which could make it harder for Indian companies to sell their steel abroad.
Some companies are even starting to make things for electric cars instead of steel to deal with these challenges.
Domestic steel prices have fallen by over 5% in the past quarter, while input costs like coking coal have risen, squeezing margins for Tata Steel and SAIL.
Steel consumption is projected to grow by about 8% in FY26, but excess supply is capping pricing power, with HRC production jumping about 13% year-to-date.
Tata Steel's captive iron ore leases will expire after FY30, leaving the company to depend on market purchases or auctions, which could raise costs significantly.
Steelmakers are planning to add 80–85 million tonnes of capacity by FY31, requiring an investment of Rs 3.7–4.1 lakh crore, increasing leverage and balance sheet stress.
Europe's Carbon Border Adjustment Mechanism and the global shift to electric arc furnaces are making it harder for Indian steel producers to compete in export markets.
- Who
- Tata Steel and Steel Authority of India (SAIL)
- What
- Facing margin squeeze due to falling steel prices and rising input costs
- When
- Current situation and projections for the next decade
- Where
- India
- Why
- Due to a combination of excess supply, rising input costs, and structural changes in the steel industry
- Domestic steel prices
- Fell by over 5% in the past quarter
- Steel consumption growth
- Projected at about 8% in FY26
- HRC production increase
- Jumped about 13% year-to-date
- Tata Steel's iron ore leases
- To expire after FY30, covering only 31% of requirement
- Iron ore auction premium
- Weighted average bid premium of about 120%
- Steelmakers' expansion investment
- Rs 3.7–4.1 lakh crore by FY31
- Europe’s Carbon Border Adjustment Mechanism
- Imposes a carbon-linked charge on imported steel
- Global steel output from EAFs
- Expected to reach nearly 40% by the end of the decade
- India's scrap shortfall
- Expected to widen to 15 million tonnes by 2030
- Graphite electrode industry
- Undergoing a 'Darwinian reset' with low-cost producers gaining control
