【Ferro-alloys.com】: The sector is affected by weak demand, particularly from the construction industry, and falling prices

Small steel producers in India are forced to cut production due to weak demand, rising inventories, and falling prices, Reuters reports.

These companies are being affected by a slowdown in construction, despite the government introducing the biggest reduction in consumer taxes in eight years to stimulate growth and counter US tariffs.

In September, India sharply reduced taxes on a wide range of consumer goods, including small cars and cement, sectors that affect steel demand. However, small producers, which account for about 45% of India’s total steel capacity, said they had cut production by a third. They argue that construction activity remains weak and consumption by the automotive sector has not yet recovered.

Demand from the construction sector, which accounts for almost a third of steel consumption, slowed down due to heavy monsoon rains, which began to fall in July. At the same time, the industry is burdened by rising raw material and electricity costs.

In September, according to BigMint, domestic prices for hot-rolled steel fell to a six-month low of $553.5/t.

Small businesses do not expect the situation to improve until December. In addition, tariffs are affecting consumer industries linked to the US.

The situation is significantly different from last year. At that time, high consumption of metal products in the country led to a significant increase in supply from suppliers in China, Japan, and South Korea. This prompted the government to introduce a temporary tariff in April to curb cheap imports.

It should be noted that in April-August (5 months of 2025/2026), India increased its steel exports (including stainless steel) by 22% year-on-year to 3.2 million tons. In particular, exports of hot-rolled coil (HRC)/sheet during this period increased by 12% year-on-year to 0.67 million tons.

• [Editor:Alakay]