Why Steel Prices Are Rising in India — 6-Month Forecast & Impact

Executive summary (TL;DR)

• Why prices are rising: a combination of safeguard duties on select imports, firm domestic demand (infrastructure and construction), and volatile/upward raw-material costs (coking coal, freight) have pushed domestic steel prices higher in early 2026. 

• Six-month quantitative forecast (Jan–Jun 2026): expect HRC to trade roughly ?51,000–?62,000/ton, Rebar (TMT) around Rs50,000–Rs59,000/ton, and billets/scrap-derived inputs ?44,000–?54,000/ton, subject to raw-material swings and policy changes. (Detailed month-by-month rationale below.) 

• Impact: secondary mills face margin squeeze or mixed opportunities depending on access to scrap/bi¬llet and price pass-through; traders face higher carrying costs and margin risk but can profit from volatility; importers face reduced arbitrage due to duties and higher landed costs. 

• Regional picture (SWOT by North/East/West/South): differs according to feedstock access (scrap, captive iron ore), local demand from infra projects, logistics costs and proximity to ports or major urban construction hubs. (Full SWOT per region below.)
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1. Why steel prices are going up in India — deep dive

1.1 Policy: safeguard duty and import protection

At the end of 2025 India’s government announced a three-year safeguard duty on selected steel products (11–12% in first year, tapering thereafter) to curb cheap imports and protect domestic producers. The duty immediately reduced the price arbitrage that importers were exploiting and gave domestic mills pricing power to raise selling prices. Domestic steel share expectations and stock prices reacted positively to this move. 

Why this matters: India is the world’s second-largest steel producer but also a price-sensitive market. When imports become more expensive, domestic mills can raise prices before losing market share — this flows straight into higher domestic price levels.

1.2 Demand: infrastructure, construction and manufacturing recovery

Multiple industry outlooks and government capex programs keep steel demand robust. Projections from industry sources suggest steel demand growth in India is likely in the 7–9% range for FY2026, supported by ongoing infrastructure projects, housing activity and manufacturing revival. Strong demand means that even modest supply tightness or policy changes can translate into price hikes. 

1.3 Raw materials and input costs (coking coal, iron ore, freight)

Primary production costs are affected directly by metallurgical (coking) coal prices and freight. Global coking coal and thermal coal markets have been volatile through 2024–2026; even short supply shocks or freight spikes can lift domestic mill costs and cause price adjustments. Trading Economics and industry data show coal prices have remained elevated into early 2026 relative to recent troughs. 

Secondary producers who rely on scrap are affected differently — scrap availability and local domestic flows matter more than coking coal — but when primary steel rises, market prices for finished products (HRC, rebar) tend to lift scrap and billet prices too.

1.4 Inventory & market psychology

Markets are also responding to inventories: lower mill and dealer inventories after seasonal dips (monsoon / year-end) amplify short-term price moves. Mills and traders will increase offers to rebuild inventories; conversely, high inventories can cap upside. Industry reporting in Jan 2026 documented mills raising HRC/CRC prices in multiple steps as sentiment shifted. 

1.5 Global dynamics & exports

Global steel prices and Chinese policy can influence India: if China restricts exports or domestic Chinese demand grows, global prices firm up and Indian mills can find export outlets at higher margins — which supports domestic prices. Conversely, if cheap exports surge, domestic prices come under pressure (but safeguarding duties blunt some of that risk for India). 

2. Quantitative 6-month forecast (Jan–Jun 2026) — ranges (Rs/ton) and rationale

Important note: forecasts are probabilistic ranges (not guarantees). They reflect prevailing Jan 2026 conditions: safeguard duty in place, robust domestic demand projections, and volatile raw materials.

2.1 Benchmarks and current prices (Jan 2026 reference points)

• Reported domestic HRC/CRC increases: HRC/CRC ~ Rs51,700/ton (second week of January 2026) after price hikes. (This is a domestic wholesale indicator reported in industry press.) (mint)

• Global HRC per market indices (USD/t): HRC ~ USD 940–960/t around 23 Jan 2026 (TradingEconomics commodity index). (Trading Economics)

2.2 Forecast assumptions

• Safeguard duty will remain at announced levels; no immediate reversals. 

• Domestic demand grows roughly in line with industry projections (7–9% FY2026). 

• Coking coal and freight remain volatile but show no dramatic collapse in the next 6 months. 

2.3 Forecast ranges (month groupings — conservative ranges)

Hot Rolled Coil (HRC) — benchmark flat steel

• Jan–Mar 2026: Rs 51,000 – Rs56,000 / ton (firm to slightly rising). Rationale: early 2026 hikes already in; first quarter demand and duties keep prices supported. (mint)

• Apr–Jun 2026: Rs 52,000 – Rs62,000 / ton (wider range: upside if raw materials remain firm or exports pick up; downside limited by possible seasonal softening). If coking coal spikes or exports increase further, expect the upper end. (Trading Economics)

Rebar / TMT (long products used for construction)
• Jan–Mar 2026: Rs 50,000 – ?54,000 / ton
• Apr–Jun 2026: Rs 51,000 – ?59,000 / ton

Rationale: domestic construction demand and inventory cycles typically support rebar; secondary trader trades can show local premiums. Regional variation (city to city) likely ±Rs1k–3k/ton from these ranges. (kallanish.com)

Billets (primary feedstock for secondary mills)

• Jan–Mar 2026: Rs44,000 – ?48,000 / ton
• Apr–Jun 2026: Rs45,000 – ?54,000 / ton

Rationale: billet prices will track primary steel and scrap; duties reduce cheap imports of billets, tightening domestic availability at times and lifting prices. (Reuters)

Scrap (shredded ferrous scrap, relevant to secondary mills)

• Highly regional; expect moderate upward pressure in the event of strong construction demand: typical moves Rs500–2,500/ton month-on-month if demand surprises to the upside.

2.4 Scenario sensitivities (what would move prices outside these ranges?)

• Upside triggers: sharper coking coal or freight increases; faster restart of capex projects; export demand spike; further protective policy favoring domestic output. (Trading Economics)

• Downside triggers: global oversupply (China/others dumping cheaper steel despite duties), sharp slowdown in domestic demand (policy delays or sudden economic shock) or rapid fall in raw material prices.
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3. How rising steel prices affect Secondary Steel Manufacturers, Traders, and Importers

3.1 Secondary steel manufacturers (mini-mills, MSME rolling units)

Secondary mills typically convert billets or scrap into rebar, wire rod, sections, etc. Effects are nuanced:

A. Input cost volatility & margin compression

• If billet/scrap prices rise quickly, secondary mills' input costs rise before they can pass through increases to local fabricators and contractors (who are price-sensitive). This compresses margins unless they have long-term contracts or differentiated products. (ICRA)

B. Opportunity from limited imports

• Safeguard duties constrain cheap imported billets/sections — this reduces import competition and gives secondary mills pricing space domestically. Well-positioned secondaries with efficient scrap procurement can benefit. (Reuters)

C. Working capital & cashflow stress

• Higher raw material and finished goods prices increase working capital needs. Many secondary mills are MSMEs with limited access to low-cost capital — liquidity pressure can cause production constraints or force sales at suboptimal times.

D. Feedstock sourcing strategy matters

• Units with good scrap collection networks or captive salvage streams will fare better. Others relying on market-priced billets face greater exposure.

E. Strategic responses

• Hedging/forward purchase contracts for billets or scrap where available.
• Value-added prod¬ucts (pre-fabricated components) to reduce commodity price sensitivity.
• Collaboration with traders for just-in-time inputs.

3.2 Traders / stockists / dealers

A. Inventory valuation & carrying cost

• When prices rise, trader inventories revalue upward — that’s good on paper, but the capital is tied up and interest costs rise. If buyers hold off, traders can be stuck.

B. Spread & arbitrage

• Volatility expands price spreads; active traders can make higher margins if they manage timing correctly. However, increased spread also implies higher risk — if prices reverse, losses can be rapid.

C. Regional arbitrage & logistics

• Traders who can arbitrage regionally (port city vs inland) profit from duty-shielded markets. But logistics disruptions or higher freight can compress such spreads.

D. Credit cycles

• Contractors/fabricators may delay payments during price rises expecting future declines — increasing credit risk for traders who finance deliveries.

3.3 Importers

A. Reduced margin from safeguard duty

• The announced safeguard duty (11–12% initially) directly increases landed costs and reduces importers’ ability to undercut domestic prices. Many importers will either cut volumes, shift to exempt categories, or seek higher-grade/specialty steel where duties don’t apply. 

B. Product mix change

• Importers will pivot to specialty steels (stainless, electrical, niche grades) or to import locations/countries with lower tariffs/exemptions. This reduces commodity import volumes and changes the competitive landscape.

C. FX and freight volatility

• Dollar/INR swings and freight rate changes remain an additional layer of cost unpredictability for importers.

4. Regional SWOT analysis (North, East, West & South)

The following SWOTs are tailored to typical Indian regional patterns (industrial base, port proximity, scrap flows, major projects). Use local market intel to refine for your LOHAA audience.

4.1 North India (Punjab, Haryana, Delhi NCR, UP, Rajasthan)

Strengths

• Large construction and infrastructure activity (NCR, highways). Strong market for rebar and TMT.
• Proximity to steel consumers (builders, infra projects) reduces inland logistics cost.

Weaknesses

• Limited port access — higher inland logistics for HRC/coils in some areas; reliance on domestic billets and trader networks.
• Many small secondary mills with thin margins and lower automation.

Opportunities

• Local demand recovery and government housing/infrastructure projects can lift offtake.
• Investment in scrap collection and roller modernization to gain pricing advantage.

Threats

• Regional price volatility and credit risk among MSME buyers; limited ability to absorb raw material price spikes.

4.2 East India (Odisha, Jharkhand, West Bengal, Bihar)

Strengths

• Proximity to iron ore and large integrated mills (captive supply lines) — benefit when iron ore prices are stable.
• Strong industrial demand corridors and port access (e.g., Haldia).
Weaknesses
• Dependence on mining performance and transport bottlenecks; concentrated production can mean local price impacts from mill outages.

Opportunities

• Export potential via east coast ports if global demand picks up; local beneficiation investment can create jobs and capacity. (bharat.steel.gov.in)

Threats

• Regulatory/mining disruptions and raw material cost spikes can rapidly change competitiveness.
4.3 West India (Maharashtra, Gujarat)

Strengths

• Port access (Mumbai, Mundra) eases imports for specialty categories and exports — but duties blunt import advantages.
• Large industrial clusters and high local demand (Mumbai, Pune, Surat). Big mills and traders based here.

Weaknesses

• Higher real estate and operating costs for small traders secondary units.

Opportunities

• Trader arbitrage using port proximity; ability to service export markets if margins attractive.
• Larger integrated mills can influence local pricing.

Threats

• Exposure to global price swings via port channels; higher competition from integrated players.

4.4 South India (Karnataka, Tamil Nadu, Andhra Pradesh, Telangana & Kerala)

Strengths

• Well-developed manufacturing base (auto, engineering) supporting demand for specialty steel.

• Strong port infrastructure (Chennai, Ennore, Kakinada) and rising investments in manufacturing corridors.

Weaknesses

• Secondary cluster competitiveness varies; some smaller units face labour/capital constraints.

Opportunities

• Growth in auto manufacturing (EVs) and exports could lift specialty steel demand — positive for mills that can upgrade product mix.
• Proximity to scrap sources from major metros helps secondary mills.

Threats

• If domestic price rises too fast, some OEMs/automakers may explore alternative suppliers or import where duties absent.

5. Practical steps LOHAA users (secondary mills, traders, importers) can take now

i) Hedge and lock-in: Where possible, enter forward procurement contracts for billets or scrap to lock in margins. Negotiate monthly or quarterly price clauses tied to a transparent index.

ii) Improve inventory turns: Avoid overstocking during volatile times — improve logistics and JIT supply to reduce working capital strain.

iii) Product differentiation: Secondary mills should explore branded/ pre-fabricated or value-added products to reduce sensitivity to raw steel price swings.

iv) Financial readiness: Secure flexible working capital lines and revisit payment terms with customers to reduce credit risk.

v) Regional sourcing: Use LOHAA’s platform to identify cheaper regional scrap or billet offers, and monitor seasonality for optimal buys.

vi) Monitor policy & global cues: Keep an eye on safeguard duty changes, global HRC benchmarks, and coking coal/freight price moves.

6 Snapshot: Jan 2026 Baseline & 6-month ranges (Rs/ton)

i) HRC (Flat)

Jan – March 2026 (Estimate) 51,000 – 56,000

April – June 2026 (Estimate) 52,000 – 62,000

ii) Rebar (TMT)

Jan – March 2026 (Estimate) 50,000 – 54,000

April – June 2026 (Estimate) 51,000 – 59,000

iii) Billets

Jan – March 2026 (Estimate) 44,000 – 48,000

April – June 2026 (Estimate) 45,000 – 54,000

7. Data & evidence highlights (most important citations)

• Safeguard duty and market reaction: India imposed a three-year tariff (12% → 11.5% → 11%) on selected steel products; this was immediately reflected in market pricing and stock moves. (Reuters)

• Domestic price hikes in January 2026: multiple mills raised HRC/CRC prices (Livemint reporting HRC/CRC at ~Rs51,700/ton after hikes). (mint)

• Domestic demand projections: industry outlooks (WSA, ICRA) predict healthy growth ~7–9% for FY2026, supporting offtake. (bharat.steel.gov.in)

• Raw material pressure — coal: coking/thermal coal indices show elevated prices and volatility that can push up production costs. (Trading Economics)

• Secondary market behaviour: regional rebar price moves and trader dynamics show local premiums and inventory effects. (kallanish.com)

8. Conclusion — what LOHAA users should expect and watch

• Near term (next 6 months): the balance of evidence points to stable to modestly higher domestic steel prices, rather than sharp falls. Safeguard duties and healthy domestic demand are the primary supporting forces. However, raw-material volatility and global supply actions are the primary risks to this outlook. (Reuters)

• For secondary mills: expect a mixed picture — those that control scrap/billet costs and move up the value chain will benefit; others face margin pressure and working capital strain. (Reuters)

• For traders: volatility creates opportunity but increases inventory funding costs and credit risk; tight risk management will be key.

• For importers: the safeguard duty narrows commodity import margins; pivot to specialty or duty-exempt products may be required. (Reuters)

References (supporting articles & reports used)

Below are the main sources used to create the analysis and forecast. Where I cited critical facts in the text I used the web.run references listed here:

1. Reuters — India imposes three-year tariff on some steel products to curb cheap imports. (Reuters)

2. Reuters — Indian steel stocks and market reaction to tariff curbs. (Reuters)

3. Livemint — reporting on domestic HRC/CRC price hikes (Jan 2026). (mint)

4. TradingEconomics — HRC commodity price index (global benchmark). (Trading Economics)

5. TradingEconomics / S&P / market reports — coal price indices and metallurgical coal market notes. (Trading Economics)

6. ICRA — Steel industry trends & outlook (FY2026 demand and margins). (ICRA)

7. WSA / Bharat Steel outlook PDF — India demand growth projection. (bharat.steel.gov.in)

8. Kallanish / regional rebar reporting — regional rebar price movements and secondary market. (kallanish.com)