Demand for steel in India will grow by 8% in FY2025/2026 – ICRA

Demand for steel in India in fiscal year 2025/2026 (ending March 31, 2026) will grow by approximately 8% (11-12 million tons) due to stable consumption from the infrastructure and construction sectors. This forecast was given by the rating agency ICRA in its December review.

At the same time, the operating margin of the steel sector during this period will remain largely unchanged at around 12.5%, which is lower than previous expectations and reflects the continued weakness of steel prices.

«Although we expect demand for steel to remain healthy, increased supply has created a temporary situation of oversupply, which has put sustained pressure on prices,» said Girishkumar Kadam, senior vice president and head of ICRA’s corporate ratings group.

ICRA expects domestic hot-rolled coil (HRC) prices to average around 50,500 rupees per ton ($560–$565) in fiscal year 2025/2026. On the cost front, some relief is expected on the back of moderate raw material prices, particularly high-quality coking coal, in the first half of the financial period. The agency has estimated the industry’s operating profit at $108/ton in FY 2025/2026, keeping its outlook for the sector unchanged at “stable.”

The agency also warned that plans to significantly expand capacity by 80–85 million tons during the 2026–2031 financial years could put pressure on balances if profits do not improve.

Regarding green steel, ICRA said that its share of total demand for steel products in the country will grow to 40% (about 150 million tons) by fiscal year 2050, driven by decarbonization commitments in end-user industries.

It should be recalled that India reached its target steel production capacity of 205 million tons per year in the 2024/2025 fiscal year. As noted in the report by MP Financial Advisory Services LLP (MPFASL), the country is confidently moving towards its strategic goal of 300 million tons per year by the 2030/2031 fiscal year.