The domestic steel demand is expected to grow in the range of 9-11% in the fiscal, said India Ratings and Research (Ind-Ra) in a report.
The demand growth is likely to be supported by the government’s continued spending on infrastructure projects such as roads, railways and ports along with expected stable growth in the end-user industries.
Demand growth was around 10% yoy during 9MFY25 and 12.4% yoy in FY24.
Rohit Sadaka, Director and Head, Materials and Diversified Industrials, Ind-Ra said,“We expect the domestic demand-supply scenario to remain balanced in FY26, with growth in demand to match with capacity additions across players, though the global oversupply situation is expected to keep the import threat high. In FY26, the profitability of steel players is likely to be range bound, on account of subdued realisations amid the threat of low-cost imports, but supported by benign raw material prices. However, domestic players have become increasingly resilient to low-cost imports from the levels seen during 2015-2016 owing to low leverage on the balance sheet and improved cost efficiency. Hence, the credit metrics are likely to remain stable, due to the sustained profitability and steady operating cash flows amid debt-led capex.”
The rating agency further said that the global demand-supply imbalance may persist on back of a modest demand recovery in some countries, supported by the pent-up demand and easing of financing conditions. Furthermore, the imposition of duties and tariffs by many countries on the import of steel will have a persistent threat of high volume of imports into India where demand growth is relatively high.
“Profitability is likely to remain rangebound in FY26, supported by benign raw material prices.”
Ind-Ra said it expects steel players to sustain their EBITDA margins in FY26 as the pressure on realisations on account of low-cost imports would partially be offset by subdued raw material prices and cost efficiency.
“The liquidity of large and mid-sized integrated players is likely to be adequate in FY26, led by steady operating cash flows, on the back of the sustained profitability and low working capital requirements due to subdued raw material prices.”
