27-05-2026

Global crude steel production declined again in April 2026, signalling continued pressure on the industrial and construction sectors worldwide. Weak Chinese real estate activity, export uncertainties, and geopolitical tensions weighed heavily on overall output. At the same time, rising infrastructure investments in India and steady recovery in the US offered some support to the market. The April production data not only reflects current economic conditions but also indicates a major structural transition underway in the global steel industry.

April 2026 crude steel output dropped to 153.4 million tonnes, mainly due to lower production in China and Russia. However, India continued to strengthen its position as the fastest-growing major steel producer, supported by strong domestic demand and infrastructure investments. The latest production numbers reveal how the global steel landscape is gradually moving from surplus conditions toward a more balanced but regionally uneven market.

27-05-2026

China’s 2.8% decline remains the biggest factor weighing on global output, reflecting prolonged weakness in its real estate sector and tighter production controls. Russia’s sharp 12.4% fall further indicates how sanctions and weaker export access are disrupting supply flows. In contrast, India’s 3.9% growth reinforces its position as the fastest-growing major steel market, driven by infrastructure spending, manufacturing expansion, and rising domestic consumption. The strong recovery in the United States, Germany, and Türkiye all posting near 9 - 10% growth suggests industrial activity and infrastructure demand are improving outside China. Overall, the data indicates that global steel demand is gradually shifting from construction led Chinese growth toward a more diversified model supported by infrastructure, manufacturing, and regional supply chain realignment.

27-05-2026

Steel production costs have risen sharply over the last five years due to higher prices of iron ore, coking coal, electricity, natural gas, freight, carbon compliance costs, and labour. Between 2019 and 2021 alone, global steel production costs surged by nearly 40 - 60% in several major producing countries. Germany and Italy witnessed the sharpest rise, with production costs increasing by around 60 - 61%, while even relatively low-cost producers like India and the US saw costs jump by 42 - 43%. Since then, costs have remained elevated because energy-intensive steelmaking has become more expensive globally. Raw materials now account for nearly 56 - 71% of total steel production costs, especially for blast furnace based steelmaking that heavily depends on iron ore and coking coal.

Another major factor is energy inflation. The steel industry consumes enormous energy around 21.27 GJ per tonne of crude steel globally making it highly vulnerable to spikes in electricity and gas prices. Europe faced particularly severe cost pressure after the Russia Ukraine conflict and later Middle East tensions disrupted energy markets, causing gas and electricity bills for some steel plants to rise by over 50 - 70% compared to pre - 2021 levels. Freight costs, carbon taxes, environmental compliance, and the transition toward “green steel” technologies have further increased operating expenses.

27-05-2026

Weak Chinese Construction Demand - Slowing real estate and infrastructure activity in China is sharply reducing domestic steel consumption.
Overcapacity in China - Steel plants continue producing despite weak demand to maintain operations and employment, creating excess supply.
Cheap Steel Dumping - Surplus Chinese steel is exported aggressively at lower prices, pressuring global steel markets.
 Global Price Pressure - Excess exports are crashing benchmark steel prices and hurting steel producers in importing countries.
 Market Distortion Cycle - Weak demand → overproduction → dumping → lower prices creates a continuous negative cycle in the global steel industry.

 Pressure on Domestic Producers - Countries importing cheap steel face declining profitability, weaker margins, and rising calls for anti-dumping duties.
 Trade Protection Risks Rising - Governments worldwide are increasingly imposing tariffs and trade barriers to protect domestic steel industries.
 Supply-Demand Imbalance - The global steel market remains vulnerable as production capacity continues to exceed actual consumption growth.

27-05-2026

India’s steel consumption pattern shows that the country is still in the early to middle phase of industrialization compared to developed economies and China. Despite being the world’s second largest steel producer, India’s per capita steel consumption remains only around 100 kg, far below the global average of 230 kg and dramatically lower than China’s 635 kg. Historically, steel consumption rises strongly when economies enter heavy infrastructure, urbanization, housing, railways, renewable energy, and manufacturing expansion phases. This is why India’s steel demand growth is currently outpacing GDP growth a classic characteristic of rapidly developing economies.

To achieve the National Steel Policy target of 160 kg per capita consumption by 2030 to 31, India would require enormous expansion in:
 Steelmaking capacity,
 Iron ore mining,
 Logistics,
 Power supply,
 Construction activity.
If India reaches this target while maintaining strong GDP growth, total steel demand could potentially cross 250 to 300 million tonnes annually over the next decade, making India the primary long-term growth engine for the global steel industry.

27-05-2026

India’s steel industry is currently among the most carbon intensive globally because a large portion of production still depends on coal based blast furnaces and sponge iron (DRI) plants. India emits around 2.5 - 2.6 tonnes of CO₂ per tonne of crude steel, significantly above the global average of roughly 1.85 - 1.9 tonnes. The main reason is India’s reliance on:
 Coking coal,
 Coal-based DRI,
 Limited availability of scrap steel. In contrast, countries such as the US and Türkiye produce a much larger share of steel through Electric Arc Furnaces (EAFs), which recycle scrap steel and generate significantly lower emissions.
Europe has also aggressively shifted toward cleaner production technologies because of strict climate regulations and carbon taxes. India now faces growing pressure to decarbonize, especially with mechanisms like the EU’s Carbon Border Adjustment Mechanism (CBAM), which may penalize high emission steel exports in coming years.

27-05-2026

Traditional Blast Furnace-Basic Oxygen Furnace (BF-BOF) route, utilized primarily by large integrated steel plants, accounts for approximately 45% to 50% of the country`s total steel market share. This production method relies heavily on virgin iron ore and metallurgical coking coal to smelt steel at massive volumes. Conversely, the remaining 50% to 55% of India`s output is driven by secondary steelmaking via Direct Reduced Iron (DRI) combined with Electric Arc Furnaces (EAF) or Induction Furnaces (IF). This highly flexible, electricity-dependent route relies on a feedstock mix of sponge iron and recycled steel scrap rather than raw coal, offering a structurally lower base carbon footprint.

CCTS and The Green Steel Mandate

To transition these diverse production assets toward a sustainable future, the Indian government has tightly linked its domestic carbon market to a formal national definition of green steel. Under the Carbon Credit Trading Scheme (CCTS) compliance mechanism framework monitored by the Bureau of Energy Efficiency (BEE), the baseline for verifying clean manufacturing is explicitly defined:

Baseline-and-Credit Mechanism: The CCTS operates as an intensity-based system rather than an absolute cap. Steel plants are assigned site-specific Greenhouse Gas Intensity (GEI) reduction targets based on their current technology.

Monetizing the Green Transition: If an integrated plant or an EAF operator optimizes its fuel mix or integrates captive renewable energy to drop below its mandated target, the national registry issues Carbon Credit Certificates (CCCs). These credits can then be sold directly on the domestic carbon market to underperforming, higher-emitting mills. This infrastructure provides a powerful double financial incentive for Indian mills: it penalizes heavy carbon footprints through domestic compliance costs while simultaneously shielding exporters from global trade barriers by generating audit-ready, internationally recognized data baselines.

27-05-2026

Recommendation
  Steel long futures – Buying opportunity will emerge around 40,000 to 41,000.
Further upside targets can be seen around 44,000 and if it breaks this level further targets up to 47,000 can be visible.
Major Constructions activities are halted around monsoon seasons which can drag steel prices till October.
Support 1 – 40,500
Support 2 – 38,500

27-05-2026

Key Risks for Steel industry
Weak Chinese Construction Demand - Slowing real estate activity in China is reducing global steel demand and pressuring prices.
 Rising Raw Material and Energy Costs - Expensive coking coal, iron ore, electricity, and freight are significantly increasing steel production costs.
 Carbon Regulations and Green Transition Costs - Steel companies must invest heavily in cleaner technologies to meet global emission norms.
 Steel Dumping and Global Oversupply - Excess steel exports, especially from China, are creating intense price competition worldwide.
 Geopolitical and Trade Risks - Wars, trade barriers, tariffs, and supply chain disruptions are impacting raw material availability and steel trade flows.

27-05-2026

Conclusion

India’s steel industry is entering a defining phase where future growth will no longer depend only on production capacity, but also on how efficiently the sector manages carbon emissions and energy transition. While India is expected to remain the world’s fastest growing steel market due to rapid infrastructure development, urbanization, manufacturing expansion, and rising per capita consumption, the industry still remains significantly more carbon-intensive than most major global producers. This creates both a challenge and an opportunity. Countries with lower-emission steel production systems are increasingly gaining an advantage in global trade, especially as mechanisms like the European Union’s Carbon Border Adjustment Mechanism (CBAM) begin penalizing carbon-heavy imports.

Over the next decade, the global steel industry may gradually transition from a low-cost production race toward a “low-carbon competitiveness” model. India’s push toward DRI, Electric Arc Furnaces (EAF), renewable energy integration, and domestic carbon markets under the Carbon Credit Trading Scheme (CCTS) indicates that this transition has already begun. However, because India’s steel demand is expected to rise massively, traditional blast furnace production will continue to remain important in the near term. The long-term winners in the steel industry are likely to be those producers that can successfully balance three critical factors simultaneously — scale, cost competitiveness, and carbon efficiency. India now stands at the center of that transformation.