Because steel prices remained low for the whole of the quarter, major brokerages anticipate that significant steelmakers would report worse quarter-over-quarter performance in October–December 2025 (Q3 FY26), with fewer realisations and poorer EBITDA per tonne.
📊 Steel Volume & Market Insights
- Quarter: Q3 FY26 (Oct–Dec 2025)
- Major Steelmakers: JSW Steel, Tata Steel, Jindal Steel, SAIL
- Volume Growth: Sequential 7%, YoY 13%
- Challenges: Lower steel prices, lapse of safeguard duty, higher coking coal costs
- Mitigation: Increased domestic deliveries somewhat offset margin losses
⚠️ Rising Coking Coal Costs
- Impact: Higher global spot costs reduced margins
- Offset: Lower iron ore prices & operational leverage benefits partially balanced
- Effect on Flat Products: Price decline sharper due to lapse of safeguard duty
- SAIL: Most impacted due to price reductions & lack of new capacity
- Private Steelmakers: JSW, Tata, Jindal still face margin pressure
Analysts’ Observations
Analysts claim that a weakness in import protection was one of the causes. Declared in April 2025, the first phase of the safeguard levy on certain imported steel grades ended in the first week of November, and its absence for a portion of the quarter made local steel less competitive when compared to less expensive imports. Later, on December 30, 2025, the government extended the safeguard duty system until April 2028.
Higher global spot costs for coking coal, a crucial feedstock that many Indian steelmakers import, also reduced margins. Despite reduced iron ore prices and improved operational leverage, which would have ordinarily eased profitability, this pressure continued.
Margin & Realisation Impact
For steel firms, we anticipate a sequential decline in margins of around Rs 1,530 per tonne on average in Q3, mostly due to lower steel prices. Higher coking coal costs somewhat balance the advantages of operational leverage and lower iron ore prices, according to Amarjeet Maurya, deputy vice president, fundamental research, Kotak Securities.
Maurya went on, “We expect an average quarter-over-quarter decline in steel realisations of around Rs 2,060 per tonne throughout our steel coverage; although prices of both long and flat products declined in the period, due to the lack of safeguard duty for the most of November and December 2025, the drop was particularly noticeable in flat items.
Company Performance Outlook
Brokerage companies believe that the majority of major steelmakers, including JSW Steel, Tata Steel, Jindal Steel, and Steel Authority of India Ltd (SAIL), would post flat or declining profits and realisations. According to research by Systematix Institutional Equities, SAIL, a public sector utility, is predicted to perform less profitably than the others because of price reductions and the lack of on-streaming of additional capabilities.
With most companies’ domestic deliveries increasing both yearly and quarterly during the October-December quarter, strong sales volumes are anticipated to somewhat offset the losses for the major steel mills. According to Elara Securities’ estimates, sequential volumes for the companies it covers are predicted to increase by 7%, while year-over-year growth is forecast to be approximately 13%.
According to Elara’s quarterly preview, Jindal Stainless is expected to report 11 percent year-over-year volume increase and 2 percent year-over-year improvement in EBITDA per tonne. However, for the July–September quarter, the company’s consolidated EBITDA is anticipated to drop by around 0.8%.
Frequently Asked Questions
1. Why is it anticipated that steel firms would post lower profits in Q3 of FY26?
Lower steel prices, the temporary removal of the safeguard levy on certain imports, and rising global coking coal costs are the primary causes of the pressure on margins. These considerations exceeded the advantages of reduced operational leverage and iron ore costs.
2. What part does safeguard responsibility play in this situation?
First implemented in April 2025, the safeguard tariff shields local steel against lower-priced imports. Lower realisations resulted from its lapse in November and December, which decreased Indian steel’s competitiveness, particularly with regard to flat goods.
3. How big is the anticipated drop in steel prices?
In Q3 FY26, analysts predict an average quarterly fall in steel realisations of around Rs 2,060 per tonne, with flat goods seeing a more severe decline than long products.
4. Do sales figures lessen the losses?
Indeed, year-over-year growth is predicted to be 13%, somewhat mitigating the effect of reduced margins, while sequential domestic deliveries are anticipated to climb by around 7%.
5. Which steel firms will probably be most impacted?
Due to price reductions and a lack of additional capacity, SAIL, a public sector steelmaker, is predicted to have the worst decrease in profitability. Although volume growth may somewhat offset the losses, private companies like JSW Steel, Tata Steel, and Jindal Steel are all anticipated to see margin pressure.
Conclusion
Due to reduced pricing, a brief lapse in safeguard duty, and increased coking coal costs, steel makers are expecting a difficult Q3 FY26 with compressed margins. Higher volumes provide some respite, but overall profitability is predicted to drop, with the most affected public sector companies being SAIL.
Disclaimer: This article is for informational purposes only and does not constitute financial advice. Investors should conduct their own research before making any investment decisions.
