Steel to stay costly through 2026, India to lead demand rebound in 2027: Report

NEW DELHI: Global steel demand is likely to remain weak in the near term as the World Steel Association sees growth of just 0.3 per cent in 2026, with a stronger recovery only coming in 2027, according to a report by Centrum. China remains the main drag on demand, while India stands out as the bright spot, the brokerage noted.

Despite soft demand, steel prices have jumped across major markets. For raw materials, iron ore and non-coking coal have moved up, but coking coal slipped from last month. Among non-ferrous metals, aluminium is still the top performer with prices holding firm, while other metals like copper, zinc, and nickel saw small dips, the report said.

The report suggests that the drag is mainly China, where demand is “likely to decline by 1.5 per cent YoY in CY26 and remain flat YoY in CY27.” India is the key outlier. Centrum notes India “is expected to outperform with growth of 7.4 per cent in CY26 and 9.2 per cent in CY27,” making it the main bright spot for steel consumption.

In February, the global crude steel output was 141.8mn tonnes, down 2 per cent year on year and a decline of 4 per cent over January. China produced 76.1mn tonnes, down 4 per cent on year, while India stood at 13.6mn tonnes, up 7 per cent on year but down 10 per cent on a month on month basis.

Despite weak demand, steel prices rallied sharply in March 2026. China’s export hot rolled coil (HRC) rose 2 per cent month-on-month. Domestic prices were even stronger with HRC up 6 per cent MoM and 12 per cent YoY, and primary rebar up 2 per cent MoM and 8 per cent YoY.

Centrum said “steady order bookings, higher raw material prices, lower imports and increased purchases by traders to hedge against volatility and disruptions amid ongoing US-Iran conflict” drove the move. Prices have risen further since then, with HRC and rebar up Rs 2,400/tonne and Rs 660/tonne vs March averages. Stainless steel 304 grade also strengthened, up ~8 per cent MoM and 17 per cent YoY in February.

The report said input costs are supporting steel prices. Iron ore rebounded in March, with Australian ore up 6 per cent MoM and 4 per cent YoY. Domestically, NMDC hiked lump prices by Rs 500/tonne and fines by Rs 450/tonne in April. Centrum “expects near-term support for iron ore prices, driven by elevated fuel costs impacting mining economics.”

Coal was mixed. Australian coking coal fell 8 per cent MoM but was still up 30 per cent YoY, due to better supply and high freight costs limiting buying. South African non-coking coal jumped 14 per cent MoM and 21 per cent YoY on freight and supply concerns.

Aluminium “continues to outperform with strong price trend.” LME aluminium rose 10 per cent MoM and 27 per cent YoY to USD 3,373/tonne in March, and is now at USD 3,619/tonne. China’s alumina prices also rebounded 5 per cent MoM after six months of decline. Global aluminium output was 5.7mn tonnes in February, up 1 per cent YoY but down 10 per cent MoM.

Other base metals softened during February. Zinc was down 4 per cent MoM, copper 3 per cent, lead 2 per cent, and nickel 1 per cent. The brokerage further added that for the rest of 2026, volatility is expected in the market due to geopolitics and freight costs. (ANI)