India's leading steel producers are poised for a significant profitability blow in the third quarter of fiscal year 2026. A report by Kotak Institutional Equities forecasts a margin contraction of Rs 1,530 per tonne for major players, driven by declining steel prices and rising input costs.
Margin Squeeze Looms for Steel Giants
The sector anticipates a challenging Q3 FY26, with average selling prices reportedly falling by Rs 2060 per tonne compared to the previous quarter. While lower iron ore costs and increased output provided some operational leverage, these benefits were largely neutralized by a sharp increase in coking coal prices.Price Declines Outpace Cost Efficiencies
The price erosion proved particularly acute for flat steel products, such as hot-rolled coils and plates. The absence of safeguard duties in November and December allowed prices for these products to weaken more substantially than for long products like steel bars and rods.Company-Specific Impacts Emerge
JSW Steel is projected to see its standalone EBITDA per tonne fall 19% quarter-on-quarter to Rs 7,580. This decline stems from reduced price realizations and elevated coal expenses, coupled with a potential 5% drop in volumes to 5.5 million tonnes.Tata Steel expects a 9.7% quarterly decrease in EBITDA per tonne, reaching Rs 13,033, despite a projected 9% rise in domestic output to 6 million tonnes. Its European operations are also under pressure, with the Netherlands market facing a significant EBITDA decline of $43 per tonne.
Jindal Steel faces a similar scenario. Kotak estimates its EBITDA per tonne to drop 21% sequentially to Rs 7,932, impacted by lower selling prices and higher costs associated with coal and new capacity ramp-ups.
SAIL anticipates a 15% sequential fall in EBITDA per tonne to Rs 4,662. Despite a modest 2.3% quarterly volume increase, the company's steel realization is set to decline.