But where does Beijing come in in Chinese steelmakers’ major success in transitioning from developed markets to emerging economies as far as exports go? China’s diplomatic outreach to countries in MENA region, rest of Africa, Southeast Asian countries and South America and its Belt and Road had had a positive impact on the steel industry attempt to build a large export market in emerging economies, alternative to the traditional developed countries, all now given to protecting their own steel turf. Unarguably, more than any other politician/head of state, President Donald Trump was unabashed in putting stiff tariff on steel imports to inject a new life to the US rust belt economy. He is having some success in reviving production and also getting foreign investment in steel – for instance, Nippon Steel’s $14.9 billion acquisition of the iconic US Steel at $14.9 billion.

The Indian authorities having the oversight of the domestic steel industry will not have missed the point that from the time China got engaged in building steel capacity at a never before seen speed to the present restructuring of the steel leviathan, the government supportive involvement is visible. The continuing restructuring relates to capacity elimination to fulfil two objectives: Take out the technology antiquated high operating cost polluting mills and cut the industry size in a falling domestic demand situation. In spite of capacity reduction and a 4.4 per cent fall in steel production to 960.81 million tonnes in 2025, the lowest since 2018, the industry reeling under weak domestic demand from real estate and infrastructure sectors remained an aggressive exporter.

A raft of trade measures including anti-dumping duties and staggered safeguard tariffs along with BIS certification requirements may have restrained imports from China, always a potential source of steel arrivals in India. (Indian trade measures, however, falls way short of similar actions by the US and the EU. The latter’s Carbon Border Adjustment Mechanism (CBAM) is a major import disincentive.) What hurts India is steel prices staying low, largely because of the surge in seaborne trade in the commodity. According to some agencies, export shipments of steels and steel products globally might have risen as much as 6.9 per cent to 279 million tonnes in 2025 from the year before. And the rise in global steel seaborne trade is almost entirely on account of China. Shipments from Japan, which is the world’s second largest steel exporter after China, recorded a fall in 2025.

Based on the prices of HR coils and primary rebar in the third quarter of FY 2026, marginal rise in coking coal cost and projections by leading fund managing firms, ET Intelligence Group has projected a 9 to 21 per cent fall in EBITDA of steel companies in December quarter. This is what the Indian steel industry can ill afford. Adequate profitability will be the enabler for the steel industry to stay the course in capacity building for the country to reinforce infrastructure, close the deficit in housing and support manufacturing based on its own resources.

It speaks of the grit of the industry that defying setback to profitability since FY 2023 caused by low domestic steel prices, it continued to pursue capacity expansion, including major investments in acquired assets. JSW Steel’s acquisition of Bhushan Power and Steel and Tata Steel powering into Bhushan Steel, since renamed TS Meramandali, Usha Martin steel unit (since renamed TS Gamharia) and Neelachal Ispat underline the industry’s faith in the industry’s future, recent frustrations with prices, low profitability and imports notwithstanding.

All the taken over units had good assets, but they met with serious financial crisis, principally because of management inefficiencies and reckless extravagance in the use of resources, financial or otherwise. The future holds so much promise for steel in India that ArcelorMittal-Nippon Steel joint venture acquired Essar Steel in 2019. Following this, the JV bought port and power assets of Essar in 2022.

If assured of the continued right kind of support of New Delhi as has been the case recently without appearing to be protectionist, India will remain standing out as the major exception to industry contraction or stagnation in China, Japan and elsewhere, mostly the developed West. Why India will stay as a notable exception among the 70 countries reporting their production and consumption to the World Steel Association will be clear from the 2025 global output tally. In the 2.2 per cent retreat in world steel production to 1.8 billion tonnes, the major contributors are China (-4.4 per cent), Japan (-4 per cent) and South Korea (-2.8 per cent). In sharp contrast, Indian steelmakers lifted 2025production by 10.4 per cent to 164.9 million tonnes from 149.6 million tonnes in 2024 when output was up 6.3 per cent. Furthermore, as opposed to shrinking demand in China, India stands out as an example of impressive rises in steel use in multiple sectors from construction to transport and energy transition. According to one agency, after growing at a CAGR of 6.4 per cent over the past decade and a half, Indian steel use is likely to record a CAGR improvement of 7 per cent through 2028 FY.

Hopefully, as all major integrated Indian steelmakers remained engaged in major capacity expansion, steel spreads should continue to improve following the required trade measures and the possibility of world iron ore prices remaining benign in the wake of supply improvement, particularly from Guinea’s Simandou mines in which China is a major promoter. Trade officials are in consensus that the average ore price for the current year is $90-95 a tonne. The same, however, will not be the case with metallurgical coal, which may command relatively robust prices of up to $220 a tonne through this year, on robust demand from India and China restraining production of the fuel.

India has a target of building steel capacity of 300 million tonnes, production of 250 million tonnes and per capita use of 160 kg by 2030-31. The important issue is not the achievability of the target in the next five years, the present capacity being around 210 million tonnes. What matters is that industry majors, including JSW Steel, Tata Steel, JSPL, SAIL and AMNS are all committed to grow capacity organically and also by way of takeovers if opportunities arise. (IPA Service)