Despite the softer macroeconomic backdrop, BigMint expects steel demand to recover in fiscal year 27, with consumption projected to grow by 9 percent year-on-year to 175 million tons, faster than in fiscal year 26. 6 percent year-on-year. The recovery is expected to be supported by improved project implementation, continued public sector investment, and sustained demand from construction-related sectors.
Historically, steel demand in India has grown faster than GDP, reflecting the country's investment-driven development model, where infrastructure construction and production expansion are more metal-intensive than the broader service-oriented economy. This relationship weakened in fiscal year 26, as the prolonged rainy season and the slowdown in capital investment projects put pressure on steel consumption growth. Nevertheless, a return to this trend is expected in fiscal year 27, as infrastructure spending leads to increased steel consumption.
Production growth will slow along with capacity expansion
BigMint expects slower capacity expansion in fiscal year 27 to reduce steel production in India. The installed steel production capacity increased by 13 percent year-on-year in fiscal year 25 and by 9 percent in fiscal year 26, bringing the total capacity to 233 million tons. However, we see a sharp slowdown in capacity growth to about 6 percent year-on-year to 248 million tons in fiscal year 27.
The Indian steel industry has faced sustained pressure on profitability over the past two years as steel prices in most product categories have steadily increased.
