Indian steel demand is expected to log a growth rate of eight percent in the fiscal year 2025-26 but softer steel prices are likely to keep the pressure on margins of domestic steel producers, Indian ratings agency ICRA said in a report on Monday, December 22.
According to ICRA, the environment for steelmakers will remain challenging in the coming quarters due to subdued prices, sticky input costs and a weak global backdrop.
Industry operating margins are forecast to stay broadly flat at around 12.5 percent in FY 2025-26, lower than earlier expectations of an improvement of 100–120 basis points, it said.
Muted earnings are expected to push industry leverage, measured as total debt to operating profit (TD/OPBDITA), to about 3.4 times in 2025-26, compared with ICRA’s August 2025 estimate of 3.1 times and 3.5 times reported in 2024-25.
“The domestic steel industry has seen a record capacity addition of around 15 million mt over the past three to four quarters, with another 5.0 million mt expected to come on stream by the end of the current fiscal,” the ICRA report said.
Domestic hot rolled coil prices rose to INR 52,850 per mt in April 2025 after a 12 percent safeguard duty was imposed, but later fell to about INR 49,500 per mt in September and around INR 46,000 per mt by November, ICRA said.
Prices are currently below import parity, reflecting supply-side pressures, it added.
India’s finished steel imports have fallen about 33 percent year on year so far in this fiscal year, while export demand remains subdued. Net finished steel imports in 2025-26 are expected to decline due to lower inbound shipments, although rising trade barriers in markets such as the United States and the European Union could divert surplus global supply towards India, the agency warned.
“In this context, the continuation of the safeguard duty remains critical to prevent a surge in imports and protect domestic prices from external shocks,” ICRA said.