weak demand + high inventories = low prices

Weak demand from large infrastructure projects coupled with an oversupply of steel domestically has pushed prices to their lowest level so far this fiscal.

Prices of benchmark hot rolled coil steel have fallen to ₹48,275 per tonne—the lowest since February this year. Hot rolled coils are large steel sheets rolled into wide coils, used mainly in automobiles, home appliances and roofing sheets.

Rebar prices are in the ₹47,000 per tonne range, the lowest since November 2020, showed data from BigMint, a market intelligence firm. Rebars are long steel rods that reinforce concrete in building and infrastructure projects, accounting for about 45% of the market.

Steel executives maintain that steel prices will recover in the coming months but analysts are not very sure.

JSW Steel CEO Jayant Acharya during a post-earnings interaction with analysts said, “We remain optimistic about a strong second half, backed by improving steel prices and higher production volumes.”

However, analysts have a different view. Industry sentiment remains cautious, one said.

“Steel prices are likely to remain under pressure in the near term due to high inventories, restricted offtake, and seasonal weakness. Any meaningful recovery will depend on a sustained pickup in construction and infrastructure demand, possibly after the festive season or with the implementation of further policy reforms,” said Dhruv Goel, CEO of BigMint.

Goel highlighted that despite recent GST reforms and expectations of a post-festive demand recovery, the impact of reforms on steel prices will be indirect, mainly via the end-user sectors. “Uncertainty surrounds the extent and timing of any demand uptick,” he added.

According to Aditya Welekar of Axis Capital, while the downside for prices remains limited due to safeguard duties, a 12% levy on imports levied in April, any meaningful recovery will hinge on a pickup in demand.

Emails sent to JSW Steel, Tata Steel, Steel Authority of India (SAIL), privately held-AMNS India, and Jindal Steel did not elicit a response.

Steel price movements

Price of the benchmark hot rolled coils started rising in February 2025 to ₹48,413 per tonne (up 3% sequentially from ₹47,044 in January) anticipating implementation of the safeguard duty, before correcting July onwards, a seasonally weaker month due to monsoons. This dip was more prominent in October, when it fell to ₹48,275 a tonne as weaknesses persisted.

In case of rebar prices, which has averaged upwards of ₹50,000 per tonne in the last four years, the price hit a lower side of ₹47,075 per tonne in September and remained almost flat in the ₹47,150 per tonne range in October.

“In the case of long products, particularly rebars, prices have fallen the most in recent months because of reduced demand. Secondary producers are struggling to operate profitably,” Goel added. “If prices don’t improve by November, many secondary mills may cut production to stabilize prices.” Secondary or smaller steel players dominate the rebar segment, accounting for nearly two-thirds of production; large integrated mills hold the remaining share.

Oversupply of steel by Indian steelmakers and reduced exports continue to be a prime factor impacting prices.

Traditionally, exports would have acted as a relief from excess production, but outbound shipments have steadily declined over the past five years, leaving producers with fewer options to balance the market.

India’s steel exports have fallen from 18.5 million tonnes in CY2021 to just 5.33 million tonnes as of August CY2025, showed Big Mint data, indicating the year will end with significantly lower exports.

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Stress continues in view of Chinese offerings being more competitive over Indian steel export prices. Previous key export markets in West Asia now prefer Chinese steel to Indian offers leading to a dip in exports.

So far, the EU continues to be one of the largest export markets. But, even there, barriers such as the European Union’s carbon border adjustment mechanism, or CBAM, policy restriction has impacted overall sentiments.

A report of the Steel Ministry, accessed by Mint, shows the extent of the demand and supply mismatch in Indian steel. Production of finished steel was 78.56 million tonnes for the April-September period, up 11% year on year. Consumption, on the other hand, was 78.88 mt for the first half of fiscal 2026, a year-on-year increase of 8.4%.

Sequentially, finished steel consumption was down 2.2% to 13.5 million tonnes in September, over 13.8 million tonnes in August, indicative of seasonal weakness.

One relief for steelmakers is that prices of raw materials like iron ore remain rangebound in the ₹3,200 per tonne range and could see some moderation as seasonal factors like monsoons lead to improved production. Coking coal prices are on the softer side, too.

Prices post safeguard

The safeguard duty imposed in April did not improve prices as the larger steel mills had expected.

For instance, in May, when domestic hot rolled coil steel prices were at ₹52,033 per tonne, the price of Chinese steel in India (post safeguard duties) was ₹54,335 per tonne, while that from Japan was lower than Indian offerings at ₹51,739 per tonne.

In June, Indian steel prices fell to ₹51,050 per tonne, while that from China was at ₹53,928 per tonne. July to September, the second quarter of this fiscal, saw Indian steel prices tumble in the ₹49,000 per tonne range and then to ₹48,000-odd and finally to the current ₹47,000 per tonne range. Differences with Chinese and Japanese offerings only widened from the ₹56,000 per tonne and ₹50,000-52,000 a tonne range, respectively.

The safeguard duties were announced for 200 days, which expires 7 November, but it is expected to be extended. The Directorate General of Trade Remedies, a quasi-judicial body under the ministry of commerce, had proposed a staggered safeguard duty: 12% in the first year, 11.5% in the second, and 11% in the third.

JSW’s Acharya expects the finance ministry’s approval for a three-year safeguard duty is expected by November.

Outlook flat

It remains to be seen how demand fares in the October-December quarter, according to analysts.

“Demand is expected to recover only towards the end of November, keeping prices under pressure through most of the third quarter of the current fiscal. The pressure in prices could be offset by higher volumes, and result in continued lower realisations, similar to the September quarter,” said Welekar of Axis Capital.

Parthiv Jhonsa, vice president at Anand Rathi Institutional Equities said that historically, the Diwali period and the week that follows tend to be slow for price revisions, so any immediate hikes only materialize after the first week of November.

“While Q3 average prices should be higher than Q2 for both flats and longs, the quantum of increase will depend on how quickly demand normalises. We currently expect a rise of ₹1,000-1,500 per tonne across categories,” said Jhonsa. Flats are industry parlance for hot rolled coil steel and longs for rebars.

Since the start of the year, JSW Steel shares have gained nearly 28%, Tata Steel has risen 26%, SAIL is up 15%, and Jindal Steel has advanced 8%, outperforming the benchmark Nifty, which has gained about 9% during the same period.