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| India Steel |
Declining Steel Demand Hits Small Producers Hard
Small steel producers in India have cut production by one-third due to weak demand and rising inventories. The construction sector, responsible for nearly one-third of steel consumption, slowed down significantly because of heavy monsoon rains starting July. Meanwhile, automotive demand has yet to recover despite government tax cuts.
Rising Costs and Market Challenges Weigh on Producers
Raw material and electricity cost increases have further burdened small steel businesses. Domestic hot-rolled steel prices fell to a six-month low of $553.5 per ton in September. Additionally, US tariffs continue to affect consumer industries closely tied to steel demand, delaying any immediate recovery.
Export Growth and Government Measures Provide Limited Relief
Despite these challenges, India increased steel exports by 22% year-on-year in April-August 2025/26. The government imposed temporary tariffs in April to curb cheap imports from China, Japan, and South Korea. However, small producers, accounting for 45% of India’s steel capacity, remain cautious and expect no production recovery before December.
ScrapInsight Commentary
India's small steel producers face a tough market due to subdued construction demand and rising input costs. While export growth and government tariffs help, ongoing US trade policies and domestic challenges will pressure prices and production through year-end. Strategic government support and market diversification remain critical to stabilizing this sector.
