Operating profits of domestic steel companies contracted to $84/tonne in Q3 FY2026 over $113/tonne reported in Q2 FY2026. Muted realisation owing to supply overhang resulted in a decline in operating profits. However, sharp rebound in steel prices from January 2026 is likely to improve the profitability in Q4 FY2026.
- Steel demand growth is expected to improve to 9-10% in FY2027 as Government of India’s (GoI’s) capex drive to steel-intensive sectors such as roads, railways and infrastructure projects see sharp improvement (about 25% increase in budgetary allocations) compared to moderation in FY2025 and FY2026. In contrast, FY2026 steel demand growth is estimated to remain moderate at 7.5% amid slow capex execution.
- Domestic hot rolled coil (HRC) prices fell sharply in late-2025, touching Rs. 46,000/MT in early-December 2025, amid excess supply over demand. Prices rebounded from January 2026 following safeguard duty reinstatement and higher coking coal costs, reaching about Rs. 53,800/MT by early February 2026. With domestic HRC prices near import-parity with slight premium (around $3/MT), further upside seems unlikely and near-term prices are likely to remain range-bound.
Exhibit: Growth in real estate investment in China (%)
Source: NBSC, ICRA Research
