India

India’s recycled steel market entered the second quarter with improving sentiment after a challenging first three months of 2026, marked by elevated import prices, rupee depreciation and subdued steel demand. Procurement remained cautious as mills balanced recycled steel imports with consumption of domestic supplies and direct reduced iron (DRI) while at the same time monitoring freight costs, exchange rates and finished steel demand. Stronger domestic steel production, easing logistics issues and stabilising global trade supported market confidence.

Imported recycled steel prices remained firm in the second quarter before easing in June. UK-origin HMS 1&2 (80:20) increased from around US$ 345 per tonne CFR Nhava Sheva in April to US$ 365 in May, supported by tight global availability, higher freight costs and geopolitical disruption. However, weaker steel demand and shrinking mill margins reduced buying activity in June, with transactions reported at US$ 335-340 per tonne CFR Nhava Sheva, while Fastmarkets’ weekly assessment widened to US$ 335-355 CFR. European-origin shredded averaged US$ 383 per tonne CFR while HMS 80:20 averaged US$ 363 during the quarter. Domestic HMS (80:20) strengthened to around Rupee 34,130 per tonne as replacement costs remained high.

Cost competitiveness continued to favour domestic metallics. Imported recycled steel traded around Rupee 35,000 per tonne while DRI was available with a price advantage at Rupee 32,300-32,400. This differential became one of the most bearish factors for imported recycled steel in June; until this gap narrows, demand for imported recycled steel is expected to remain subdued, although stronger steel production and consumption should gradually boost orders once import economics become more favourable.

Import buying activity remained selective throughout the quarter. Overseas suppliers maintained firm offers while Indian buyers resisted higher landed costs. Containerised cargoes dominated procurement whereas bulk bookings remained limited because of elevated freight costs and cautious inventory management. Several cargoes were diverted to Bangladesh and Pakistan, tightening imported recycled steel availability in India. The stronger US dollar further increased landed import costs, encouraging mills to optimise procurement between imported and domestic recycled steel as well as DRI.

India’s recycled steel imports continued to decline as steelmakers responded to weak profitability. With imports having eased from 8.5 million tonnes in 2024 to 8.2 million tonnes in 2025, this slowdown accelerated in the first quarter of 2026 when imports dropped to around 1 million tonnes as compared to 2.3 million tonnes during the opening quarter of 2025, representing declines of more than 55% year on year and of nearly 30% from the previous quarter. Elevated international recycled steel prices, rupee depreciation, subdued steel demand and the availability of lower-cost domestic recycled steel and DRI remained the key reasons for weaker imports.

Despite lower imports, India’s steel sector continued expanding. Crude steel production reached 44.5 million tonnes during the first quarter of 2026, up 11% from 40.09 million tonnes in the corresponding period of 2025. Monthly production reached 15.15 million tonnes in January, 14.03 million tonnes in February and 15.32 million tonnes in March. More recently, crude steel production totalled 14.21 million tonnes in May, up 2.9% year on year. Growth continued to be supported by infrastructure, construction, engineering and manufacturing demand, while mills successfully replaced imported recycled steel with domestic supplies and DRI.

Domestic steel consumption also strengthened. Apparent steel consumption increased to

41.5 million tonnes during the first quarter of 2026 from 37.1 million tonnes a year earlier, representing approximately 12% growth. Finished steel consumption climbed 9% year on year in May to 14.33 million tonnes, reflecting sustained demand from infrastructure, construction, engineering and capital goods. Although stronger steel demand supported higher crude steel production, mills remained cautious about importing recycled steel because domestic raw materials continued to offer better cost economics.

Looking ahead, market conditions are expected to improve gradually during the third quarter amid strengthening construction activity, infrastructure spending and manufacturing demand. Imported recycled steel prices are likely to remain relatively firm, although price increases may moderate if freight costs ease and global supply improves. Indian steelmakers are expected to gradually increase procurement as finished steel demand strengthens and inventories require replenishment, although purchases are likely to remain production-driven rather than speculative.

The long-term outlook for recycled steel remains favourable. Expanding infrastructure investment, growing electric arc furnace capacity and continued implementation of the Vehicle Scrappage Policy are expected to support higher domestic consumption. However, domestic generation is still insufficient to meet industry requirements, ensuring imported recycled steel remains an important component of India’s metallics basket. Overall, the market is expected to remain balanced during the third quarter, with improving steel demand supporting a gradual recovery. Freight costs, currency movements and global geopolitical developments will continue to influence procurement decisions.