New Delhi

India’s steel consumption is expected to grow 7 per cent year-on-year to 175.8 million tonnes in FY27, but further price increases may be limited as domestic prices approach the safeguard-duty threshold and the risk of higher imports rises, according to a report by Equirus Securities.

“We expect steel consumption to grow 7% yoy to 175.8mt in FY27E, implying 6.5% yoy growth in 2HFY27E,” the report said.

The report noted that steel demand remained resilient even as domestic production growth lagged consumption. While supply constraints helped push up prices in August and September, the brokerage expects capacity increases to support production in the second half of the financial year, limiting further price gains.

India’s crude steel production rose 2.9 per cent year-on-year to 85.1 million tonnes in the first half of FY27, compared with a 7.5 per cent increase in steel consumption to 84.9 million tonnes. Demand in the second quarter grew 6.6 per cent year-on-year to 43.4 million tonnes.

Equirus attributed the demand growth to activity in the automotive and infrastructure sectors, along with other emerging uses. Government spending, GST cuts and sustained private capital expenditure are also supporting steel demand, the report said.

However, supply constraints at Rashtriya Ispat Nigam Limited (RINL) and secondary steel producers tightened availability and contributed to the price increase. The report attributed weaker output among secondary producers to high raw material costs, plant disruptions, greater working capital needs and tighter coal availability.

The brokerage cautioned that domestic steel prices are approaching the USD 675 per tonne safeguard-duty threshold, beyond which the protection ceases to apply. A widening price difference between India and China could also encourage higher imports, putting a limit on domestic prices.

Steel imports rose 23.8 per cent year-on-year to 4.1 million tonnes in the first half of FY27, while exports increased 26.2 per cent to 3.5 million tonnes. India remained a net importer of finished steel, with net imports of 0.6 million tonnes during the period, narrowing to around 0.1 million tonnes in the second quarter.

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The report said the sector’s outlook would increasingly depend on production growth and company-specific earnings performance rather than further increases in steel prices. Equirus said it favoured opportunities driven by valuations and capacity-led earnings growth, as the scope for additional price gains appeared limited.