Is this the start of a steel upcycle or just a short-lived bounce?
Jan 19, 2026
AdvisorAlpha
Summary
Indian steel prices surge on safeguard duty and exports; margin gains limited by rising costs.
After nearly a year of depressed pricing, Indian steel prices have moved sharply higher in early January 2026. The sudden rally has raised a key question for investors and industry watchers alike: is this the beginning of a sustained upcycle, or a temporary rebound driven by policy and exports?
As of January 18, 2026, benchmark Hot Rolled Coil prices have climbed to around ₹51,700 per tonne, marking a rise of over ₹5,000 per tonne from December lows. The move has been swift, but the forces behind it are structural rather than demand-led.
What is driving steel prices higher?
Safeguard duty resets the market
The most important trigger came on December 30, 2025, when the Indian government imposed a definitive 12% safeguard duty on flat steel imports for three years.
The duty targets low-cost imports from China, Vietnam, and Nepal. Prior to this, imported steel was meaningfully cheaper than domestic supply. The 12% levy has added roughly ₹5,000 to ₹6,000 per tonne to the landed cost of imports, allowing Indian mills to raise prices without risking market share loss.
This has effectively reset import parity and strengthened the pricing floor for domestic steel.
Europe’s pre-CBAM buying clears domestic supply
India has turned into a net exporter of steel again, supported by strong demand from Europe.
The European Union’s Carbon Border Adjustment Mechanism entered its payment phase on January 1, 2026. Ahead of this shift, European buyers aggressively front-loaded purchases to avoid higher costs and potential carbon taxes.
Between April and November 2025, Indian steel exports rose 31% year-on-year. This export surge reduced the domestic supply overhang, easing inventory pressure and giving mills greater pricing leverage.
Rising input costs limit margin upside
While selling prices are rising, cost pressures remain elevated.
Prices of imported metallurgical coke have increased, and the weaker rupee, trading near 90.2 against the US dollar, has further pushed up raw material costs. As a result, ICRA expects steel industry operating margins in FY26 to remain flat at around 12.5%, as higher prices largely offset cost inflation rather than expand profitability.
Will the rally sustain?
Views remain mixed.
On the supportive side, infrastructure and construction demand is expected to grow by 8% in FY26, translating into incremental demand of 11 to 12 million tonnes. Mills also entered 2026 with lean inventories of just 8 to 12 days, providing near-term price support.
On the other hand, capacity additions pose a risk. India added 15 million tonnes of steel capacity in 2025, with another 5 million tonnes expected by March 2026. If Chinese domestic demand remains weak, excess global supply could pressure prices across markets.
Where prices stand now
HRC: ₹51,700 to ₹52,000 per tonne, up around 10% from December
Rebar: around ₹52,500 per tonne, up about 7% in January
Integrated producers such as JSW Steel, Tata Steel, and AM/NS India are the primary near-term beneficiaries of the improved pricing environment.
The takeaway
January’s steel price rally is being driven by policy protection and exports rather than a pure demand revival. The uptrend has support, but its durability will depend on how capacity additions and global pricing play out over the coming quarters.
