Healthy infrastructure, automotive demand keeps domestic steel consumption robust as India turns net steel importer: Report
New Delhi, July 19
Domestic finished steel consumption remained strong in the June quarter, supported by infrastructure spending, real estate activity, automobile manufacturing and heavy engineering demand, with demand outpacing production and resulting in India becoming a net importer of finished steel, according to an HDFC Securities Institutional Research Q1FY27 Results Preview report.
The report said, "Domestic consumption of finished steel (FS) in India remained healthy as it rose ~9% YoY in Q1FY27." It attributed the growth to "continued momentum in large-scale public infrastructure capex, steady demand from real estate and urban development projects, a rising demand from automotive manufacturing, and heavy engineering sectors." It added that "FS production growth was slower at 6% YoY, leading to net imports in Q1FY27."
On pricing, report said domestic hot-rolled coil (HRC) prices continued to strengthen during the quarter, while rebar prices moderated after mid-April. As a result, the brokerage expects steelmakers to report higher blended realisations for the quarter, although rising raw material costs are likely to temper margin gains.
The report said, "While domestic HRC (flats) continued to trend higher in Q1FY27, rebar (longs) witnessed a cool-off mid-April'26 onward."
It added, "We estimate steel companies will continue to deliver higher blended realisation QoQ in Q1FY27."
However, "Steel companies will also report higher cost of production (CoP) as both coking coal and iron ore prices are on a rise," with coking coal prices expected to increase by around USD 15-20 per tonne quarter-on-quarter and iron ore prices by about Rs 300 per tonne. "These should moderate the gross and EBITDA margin expansions from robust pricing gains," the report said.
Despite higher input costs, the brokerage firm maintained a positive outlook on the domestic steel sector, citing healthy demand and supportive pricing.
— ANI
Reader Comments
Infrastructure spending is the backbone of our growth. Happy to see real estate and auto sectors driving this demand. But input costs rising is a concern - will steel companies pass it to consumers? 😕
Healthy steel demand is a good sign for any growing economy. But as an investor, I'm watching those rising coking coal prices closely - they could squeeze margins despite higher realisations.
This is great news for our economy! More infrastructure means more jobs and development. But becoming net importer is a double-edged sword - we must ramp up production. The auto sector growth is particularly encouraging for states like Tamil Nadu. 🚗
Good analysis but the real question is: Are we investing enough in new steel capacity? China produces 10x our steel. We need to think long-term, not just quarterly results. Also, rising input costs could hurt smaller steel players more. 📉
India's steel demand outpacing production is ultimately a positive indicator of industrial growth. The infrastructure push is clearly working. However, dependency on imports for such a strategic material needs careful management. Let's hope the positive outlook continues.
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