India Steel Industry Wraps 2025 Weak Performance Recovery Predicted 2026
India’s steel industry concluded 2025 on a cautious note, marked by slowing domestic demand, margin pressures, and subdued exports that tempered overall market performance. Flat steel producers were particularly affected by soft automotive and appliance sales, while long steel benefited modestly from ongoing infrastructure spending. Analysts project a gradual recovery in 2026, supported by policy clarity, stabilising housing and auto demand, and renewed government-led projects, signalling cautious optimism for the year ahead.
Domestic raw material markets showed intermittent volatility through 2025. Iron ore maintained firm prices due to robust consumption, whereas coking coal and scrap markets remained rangebound despite rising global coal rates. Capacity expansions persisted across integrated and secondary steel mills, intensifying competition and further constraining margins. Export volumes stayed weak for much of the year, impacted by global pricing pressures and uncertainty around the EU’s Carbon Border Adjustment Mechanism (CBAM), which continues to influence trade strategies.Industry experts note that while flat steel faced headwinds, long steel segments were somewhat insulated thanks to government-backed infrastructure projects. “Infrastructure-led demand has kept long steel prices relatively stable despite overcapacity,” said a senior steel analyst. However, oversupply and imported competition capped potential gains, leaving profit margins under pressure.
Looking into 2026, overall steel demand is projected to grow 7–9%, particularly after the first quarter. Stabilising automotive sales, rising housing activity, and sustained government infrastructure investments are expected to drive this recovery. Analysts caution that early-year margins could remain tight due to continued competitive pressures and volatile raw material costs. Export performance may see moderate improvement as pricing spreads strengthen in key markets, though long-term competitiveness will depend heavily on CBAM compliance.Sustainability is gradually becoming a central focus across India’s steel sector. Producers are increasingly investing in energy-efficient operations, enhanced scrap processing, and green steel technologies to address overcapacity concerns and align with the nation’s net-zero targets. These strategic shifts not only promise environmental benefits but also bolster operational resilience and long-term competitiveness.The coal sector, integral to steel production, is also on the cusp of transformation. Draft regulations for a national coal exchange were issued in 2025, with the Coal Controller Organisation designated as its regulator. Early 2026 may see the launch of this digital platform, which will centralise coal sales, enable transparent price discovery, and standardise settlement processes. The exchange is expected to benefit commercial and captive miners while challenging existing e-auction and bilateral sale models.
Despite growing competition from renewables, thermal coal demand remains strong, sustaining energy requirements for steel and other industrial sectors. Analysts suggest coal will continue playing a transitional role in India’s energy mix, even as low-carbon technologies expand. Overall, while 2025 ended cautiously, strategic policy support, infrastructure-led demand, and sustainability-driven investments are set to underpin a gradual rebound in India’s steel and coal sectors in 2026.
