India's primary steel producers are expected to maintain stable operating profitability in the fiscal year 2026-27 despite a sharp increase in production costs, aided by higher domestic steel prices, continued protection from safeguard duties on imports, and healthy domestic demand, Crisil Ratings said in a sectoral report on Friday, August 7.
It said that profitability, measured by earnings before interest, tax, depreciation and amortisation (EBITDA) per metric ton will remain at INR 10,500-11,000/mt ($110-115/mt) in the current fiscal year, broadly in line with the decadal average even as production costs rise by INR 2,000/mt ($21/mt).
The report is based on the assessment of eight primary steel manufacturers, including JSW Steel, Tata Steel, Steel Authority of India (SAIL), Jindal Steel, ArcelorMittal Nippon Steel India, NMDC Steel, ESL Steel and Evonith Steel, which together accounted for around half of India's steel output in the last financial year.
The increase in costs will be driven primarily by higher coking coal prices, elevated logistics expenses and rising energy costs. Coking coal, which accounts for nearly 40 percent of steel production costs, is expected to become 5-7 percent more expensive amid potential supply disruptions in key exporting regions and sustained global demand. Freight, shipping, insurance, power and fuel costs are also expected to remain elevated, the report said.
However, these pressures would largely be offset by a projected 6-8 percent increase in domestic steel prices, supported by stronger global steel prices, the government's 11.5 percent safeguard duty on certain flat steel imports and robust domestic demand, it added.
According to the report, domestic steel demand is expected to grow 5-7 percent this fiscal year, supported by continued investments in infrastructure and healthy demand from the automotive, engineering and construction sectors.
Over the longer term, steel consumption is expected to expand at 6-8 percent annually, aided by India's relatively low per capita steel consumption compared with the global average, Crisil said.
