- Robust automotive production supports demand growth
- Import dependence persists for specialised alloy steel grades
India’s alloy steel round bar prices remained on an upward trajectory during the first half of CY’26, supported by improving demand from the automotive and engineering sectors, higher alloy input costs, stronger mill order books, and disciplined pricing by producers.
This comes amid robust structural demand in India’s alloy steel market, with domestic consumption consistently outpacing production even as prices have stabilised at their highest levels in more than a year. India’s automobile production surged in H1CY’26, while the government’s Make in India and other indigenisation initiatives continue to shift high-value manufacturing to domestic facilities.
Notably, 50 mm BF-route round bar prices increased from INR 63,000/t on
7 January 2026 to INR 70,250/t by the end of June, while 50 mm EAF-route prices rose more sharply from INR 65,000/t to INR 74,750/t over the same period. In the larger diameter segment, 200 mm BF-route prices advanced from INR 68,000/t to INR 75,250/t, whereas 200 mm EAF-route material climbed from INR 70,000/t to INR 79,750/t. Prices have remained firm in July so far, with the market entering a phase of consolidation following the earlier rally.
Prices rally in Jan-May before stabilising during Jun’26
Prices strengthened steadily between late January and mid-May as automotive OEMs, component manufacturers, and engineering companies resumed procurement after drawing down inventories at the end of 2025. At the same time, higher alloying element costs, improving order inflows, and tighter spot availability enabled mills to implement successive price increases across both BF- and EAF-route products.
However, the rally lost momentum from June onwards. BF-route prices eased marginally amid softer buying and comfortable inventories, while EAF-route prices remained unchanged, reflecting balanced supply-demand conditions and disciplined mill pricing.
A trader said, “Automotive demand has remained healthy and mills are comfortably holding current prices. Buyers are no longer delaying purchases as they did during the correction phase, although procurement continues to be largely requirement-based.”
Consumption continues to outpace production
India’s alloy steel demand has continued to exceed domestic production, reflecting a persistent structural supply gap. Alloy steel production increased from 7.01 mnt in CY’24 to 8.98 mnt in CY’25, while consumption rose from 8.15 mnt to 9.94 mnt over the same period, supported by robust demand from the automotive, engineering, capital goods, railways, defence, and infrastructure sectors.
The trend continued in CY’26 (January-May, provisional), with production reaching 4.60 mnt compared with consumption of 5.05 mnt, indicating that domestic demand continues to exceed supply despite higher output.
Capacity utilisation remains below potential
India’s installed alloy steel capacity is estimated at around 11.5 mnt, while utilisation remains at 60-70%, suggesting considerable scope to increase domestic output.
Industry participants attribute the relatively low utilisation not to a lack of installed capacity but to product mix limitations, operational constraints, and insufficient production of specialised high-performance alloy steel grades.
A market participant said, “The issue is not capacity alone. Domestic mills still need to expand production of specialised grades where imports continue to dominate. Better product alignment would reduce import dependence and improve capacity utilisation.”
Imports remain structurally important
The persistent gap between domestic production and consumption has continued to support alloy steel imports. India imported 1.28 mnt of alloy steel in CY’24, which moderated to 1.14 mnt in CY’25 as domestic production improved. During January-May 2026 (provisional), imports stood at 0.51 mnt, while exports totalled 0.12 mnt.
Despite the moderation, imports remain structurally important because domestic mills continue to face limitations in producing specialised alloy steel grades required by the automotive, bearing, defence, and precision engineering industries.
Automotive sector remains key demand driver
The automotive sector is expected to remain the primary demand driver for India’s alloy steel market, supported by steady vehicle production, continued localisation of components, and growth in the auto component industry. Rising investments in electric vehicles, railways, and defence manufacturing are also expected to sustain demand for specialised alloy steel grades.
India’s automobile sector recorded strong growth in H1CY’26, according to SIAM data, supported by healthy demand across all major vehicle segments. Overall domestic automobile sales rose 23% to 15.01 million units from 12.24 million units, while total automobile production increased by 23% to 18.20 million units from 14.80 million units in H1CY’25.
Automobile sales during H1CY’26 were supported by healthy domestic demand, lower GST rates, softer financing costs, a favourable base effect, and new model launches despite disruptions in West Asia.
SIAM also noted that steady consumer sentiment, easing monsoon deficiency, moderate inflation, and expectations of healthy festive demand are expected to support the market, although commodity costs, geopolitical developments, and the progress of the monsoon remain key watchpoints.
A major alloy steel manufacturer reported that demand remains healthy, supported by robust order bookings, primarily from the automotive sector. According to the producer, automotive OEMs and component manufacturers continue to receive strong export orders from key passenger vehicle markets, particularly the United States and the European Union.
The producer added, “As long as overseas vehicle orders remain healthy, mills expect procurement from OEMs and component manufacturers to stay stable, providing continued support to domestic alloy steel prices.”
Outlook
India’s alloy steel market is expected to remain fundamentally supported through the remainder of 2026, underpinned by continued investment across the automotive, engineering, capital goods, railways, defence, and infrastructure sectors. Following the sharp recovery between January and May, alloy steel prices are likely to remain stable unless ferro alloy, scrap, or imported raw material costs move significantly.
The structural demand-supply gap is expected to persist. Unless domestic producers improve capacity utilisation while expanding production of specialised grades, imports will continue to play an important role in meeting India’s alloy steel requirements. Stable prices, robust end-user demand, and continued reliance on imports suggest the market has moved beyond a cyclical recovery into a phase of sustained, demand-led growth.
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