Domestic steel tightens on low inventories as JSP gasification push signals structural shift – A-360 degree view

• Steel prices rise sharply on low inventories, scrap shortages despite weak exports
• Jindal Steel expands coal gasification to reduce dependence on imported fuels

How will the ongoing conflict in the Middle East affect global metals markets? As the US-Israel and Iran war escalates, BigMint presents a sharp update on the implications for the Indian metals, raw materials and energy markets:

India’s domestic steel market has tightened further, with prices rising sharply on the back of low inventories and raw material constraints. At the same time, Jindal Steel has expanded its coal gasification capabilities as part of efforts to reduce dependence on imported fuels and mitigate exposure to volatile energy markets.

Primary mills have increased rebar list prices by up to INR 2,000/t in early April, while trade-level prices have also moved higher week-on-week. Rebar inventories have declined by around 20-25% month-on-month, with mills operating at low inventory levels of around 5-8 days, supported by strong bookings and continued project-linked demand.

Constraints in raw material availability are driving the uptrend. Shortages of scrap and sponge iron, along with supply chain disruptions, have pushed input costs higher and supported price increases across segments. Induction furnace rebar prices have risen sharply during the week, although buying activity is increasingly turning cautious and need-based at higher levels.

Indian HRC export activity remains limited as disruptions across key shipping corridors, including the Red Sea-Suez Canal route and the Strait of Hormuz, have increased freight uncertainty, extended transit times and raised insurance costs. These factors are reducing export viability and keeping overseas demand muted, according to media reports.

Brent crude is holding near $111/bbl, reflecting persistent supply-side risks linked to geopolitical tensions in the Middle East. While there have been intermittent signs of easing in flows, broader uncertainty across energy and shipping corridors continues to sustain volatility in fuel and logistics costs.

Coal and iron ore vessel rates have softened amid limited fixture activity, pointing to slower trade flows despite ongoing disruptions. Improved vessel availability and cargo arrivals have also eased pressure on portside coal markets, with RB2 (5,500 NAR) prices at Paradip holding around INR 11,300-11,500/t after correcting from earlier highs.

Imported scrap offers in South Asia are elevated, with shredded scrap around $400-405/t CFR, but buying interest remains subdued with bids trailing offers. Domestically, tighter availability has supported prices in some northern markets, while western regions have seen largely stable levels, indicating fragmented conditions rather than broad-based strength.

LME aluminium is holding near $3,465/t, with trading activity subdued due to holiday-related closures and limited fresh offers. In India, tight scrap availability continues to constrain downstream segments, while primary ingot prices have shown slight softness, reflecting cautious buying interest rather than a demand-led push.

A weaker rupee near 95 against the dollar is further increasing procurement costs for Indian mills and smelters, adding to overall cost pressures.

Jindal Steel’s push toward coal gasification reflects a broader structural response to energy volatility. The company is scaling the use of syngas across steelmaking processes, including injection into blast furnaces and downstream applications. P.K. Biju Nair, Executive Director, Angul, Jindal Steel, said, “Synthesis gas from swadeshi coal can replace imported methanol, ammonia, ammonium nitrate, and LNG,” highlighting the potential to reduce import dependence and improve cost efficiency in a high energy price environment.

The company had earlier set up India’s first coal gasification-based DRI unit in 2014, marking an early shift toward integrating domestic coal into steelmaking processes.

Domestic price strength is now being driven primarily by supply-side constraints rather than demand expansion. Rising steel prices, supported by low inventories and raw material shortages, are occurring alongside weak export activity and cautious buying patterns. This divergence suggests that while prices may remain firm in the near term, the trajectory will depend on whether demand improves or if easing logistics and raw material availability begin to moderate the current uptrend.