[SMM Analysis] India's steel demand outpaces production growth as exports rebound but imports keep market in net-deficit

India's finished steel consumption continued to outpace production growth in July, while a sharp recovery in exports narrowed the country's monthly trade deficit, although cumulative imports remained higher than exports during the first four months of FY2026-27, according to provisional data released by the Ministry of Steel.

India produced 14.3 million tonnes of crude steel in July, up 1.2% year on year, while finished steel production increased 1.4% to 13.7 million tonnes. During April-July, crude steel output reached 56.3 million tonnes, up 2.6% from a year earlier, with finished steel production rising 4% to 54.3 million tonnes. 

Domestic demand continued to expand at a much faster pace than supply. Finished steel consumption rose 6.5% year on year to 14.4 million tonnes in July, while cumulative consumption during April-July climbed 7.8% to 55.9 million tonnes, highlighting resilient end-user demand despite seasonal disruptions from the monsoon. 

India's trade performance also improved during the month. Finished steel exports surged 44.1% year on year to 699,300 tonnes in July, almost matching imports of 702,300 tonnes, which increased 9.5% from a year earlier. However, the stronger export performance was insufficient to offset the heavy inflow recorded earlier in the fiscal year. During April-July, finished steel imports reached 2.77 million tonnes, up 36.6%, while exports increased 35% to 2.29 million tonnes, leaving India a net importer by approximately 474,000 tonnes. 

The latest figures suggest overseas shipments have begun to recover as Indian mills seek additional outlets amid subdued domestic buying during the monsoon season. Nevertheless, import volumes accumulated earlier in the year continue to outweigh export gains, indicating that overseas material remains an important source of supply in the domestic market.

The production and trade data also point to a widening gap between apparent demand and domestic supply growth. While finished steel consumption expanded nearly twice as fast as production during April-July, the supply deficit has been partly met through imports, helping explain why India has remained a net importer despite the recent improvement in exports.

Price trends reflected contrasting conditions across product segments. Average domestic hot-rolled coil (2 mm) prices eased only 0.4% month on month in July to INR69,828/tonne, remaining 13.3% higher than a year earlier. In contrast, TMT bar prices declined 5.6% from June to INR56,698/tonne, although they were still 3.7% above July 2025 levels. The divergence suggests flat steel prices remained relatively well supported by tighter availability and manufacturing demand, while construction-linked long products came under greater pressure from seasonally weaker buying activity during the monsoon. 

Raw material costs softened during the month, potentially providing mills with some relief from input cost pressures. NMDC's benchmark Bailadila lump ore (65.5% Fe) price declined 4.4% month on month to INR5,450/tonne, while fines (64% Fe) fell 3.1% to INR4,700/tonne. Domestic HMS II scrap prices also dropped 5.1% to INR38,580/tonne, reflecting weaker raw material markets even as finished flat steel prices remained comparatively resilient. 

Looking ahead, the narrowing gap between monthly exports and imports suggests Indian producers have become more competitive in overseas markets, supported by firmer export enquiries and improving regional demand. However, whether India returns to being a net exporter in the coming months will depend on the pace of export recovery and the extent to which domestic consumption continues to outstrip production after the monsoon season.