Primary steel makers may maintain Rs 11K per tn operating profitability in FY27 despite cost pressure

New Delhi: Primary steel makers are expected to maintain operating profitability of Rs 10,500-11,000 per tonne in the current fiscal despite higher input cost, a Crisil Ratings report said on Thursday.

Higher global steel prices and the effect of the safeguard duty imposed last year will help keep profitability steady, the report said.

This, coupled with healthy demand growth, is expected to strengthen cash accruals and support capex requirements while sustaining stable credit profiles, it said.


"The operating profitability of primary steel producers, measured by EBITDA per tonne, is expected to remain resilient at Rs 10,500-11,000 per tonne this fiscal despite rising cost pressures," it said.

The cost of production for primary steel producers - producers of steel predominantly through BF-BOF (blast furnace-basic oxygen furnace) route - is projected to rise by around Rs 2,000 per tonne this fiscal, to Rs 53,000 - 54,000 per tonne, owing to higher coking coal prices and elevated logistics and energy costs.

Coking coal, which accounts for nearly 40 per cent of production costs, is expected to become 5-7 per cent costlier amid potential supply disruptions in key exporting regions and sustained demand from major steel producing countries.

Higher freight, shipping and insurance costs, along with elevated power and fuel expenses, will further add to cost pressures.

Crisil Ratings conducted a study of eight primary steel manufacturers which accounted for around half of India's total steel output last fiscal.

Crisil Ratings Director Ankit Hakhu said, "Higher global steel prices, continued protection under the 11.5 per cent safeguard duty and healthy domestic demand growth are expected to support a 6-8 per cent increase in domestic steelprices this fiscal. This will offset rising cost pressures and keep profitability steady.

Domestic steel demand is expected to remain healthy, growing 5-7 per cent this fiscal on the high base of fiscal 2026, supported by sustained investments in infrastructure and robust demand from the automotive, engineering and construction sectors.

The long-term demand outlook also remains strong, with steel consumption expected to grow 6-8 per cent annually, aided by India's low per capita steel consumption of around 109.2 kg in 2025, which was significantly below the global average of 209 kg.

JSW Steel, Jindal Steel, Steel Authority of India Ltd (SAIL), Tata Steel and AMNS India are some of the top steel-making entities in India.