Indian steel producers are likely to face weaker earnings in the second quarter of FY26 as falling steel prices weigh on margins, according to a report by JM Financials. The average domestic Hot-Rolled Coil (HRC) price slipped to Rs 49,600 per tonne, down by Rs 2,000 compared with the previous quarter, news agency ANI reported.The report noted that while companies expect a reduction of $5-10 per tonne in coking coal consumption costs, this benefit is set to be offset by lower realisations. As a result, EBITDA is projected to contract by around Rs 3,500 per tonne during the quarter. On the other hand, easing raw material costs may support working capital and help reduce net debt levels.In contrast, non-ferrous players are expected to record stronger margins. Aluminium prices on the London Metal Exchange (LME) rose by $140 per tonne on a quarterly basis to $2,600 per tonne, while zinc gained $120 per tonne, lifting the outlook for companies such as Hindustan Zinc.Looking ahead, JM Financials suggested that spreads could improve in the second half of the fiscal year, supported by a $20 per tonne rebound in Chinese HRC prices, government corrections to safeguard duties, extended import duty visibility, and seasonally stronger demand.Steel remains a de-regulated sector in India, with the government acting as a facilitator through policy measures. The National Steel Policy, 2017 has set a vision of achieving 300 million tonnes of crude steel capacity and 255 million tonnes of production by 2030. Crude steel output stood at 144.30 MT in 2023-24 and 152.18 MT in 2024-25, reflecting a 5.5 per cent annual rise. Finished steel consumption rose by 11.6 per cent over the same period, reaching 152.13 MT in 2024-25.India, the world’s second-largest crude steel producer, is on track to become a global leader in both capacity and production by 2030-31.Meanwhile, Union steel and heavy industries minister H D Kumaraswamy on Thursday underlined the importance of developing specialised high-grade steel to reduce reliance on imports, particularly for defence, strategic sectors, and automobiles. Addressing the SIAM annual convention in a video message, he said, “The steel industry is looking at developing specialised steel, which is required for certain components or parts in the auto sector, so that this sector need not be dependent on imports.” His comments highlighted government support for the auto industry under the PLI scheme, which has already seen investments of Rs 29,576 crore as of March 2025.Kumaraswamy further urged industry players, research institutions, and start-ups to embrace innovation and sustainability, adding that India must become “a beacon of sustainable mobility for the world.”
