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Informist, Thursday, Nov. 13, 2025

MUMBAI – Rising costs of raw materials, coking coal and iron ore, will keep margins of major steel companies like Steel Authority of India Ltd. and Tata Steel Ltd. under pressure, Sandeep Kumar, vice president - raw materials, Tata Steel, said Thursday in a panel discussion at the 12th Indian Steel Market Conference in Mumbai.

The marginal cost of production of iron ore is rising rapidly, Kumar said. Marginal cost of production is the additional cost of producing one more unit of a good. With an expected India production of 210 million tonnes of crude steel per annum by 2030, the requirement of iron ore and coking coal will be around 340 million tonnes per annum and around 90 million tonnes per annum, respectively, he added.

Marginal cost of coking coal is also expected to rise in the coming years. "...our view is that coking coal going forward will be the big challenge worldwide because most of the mines, most of the supplies have been coming from Australia and where the mines are getting older, the taxes are getting higher and therefore some of the mines have also closed this year. About three mines got closed this year," Kumar said. More mines might close if the Australian government doesn't rectify its taxation, Kumar added.

With high cost of mining in Australia and the older blocks, the marginal cost of coking coal is only going to go up, he said. While there are new supplies from Mongolia, Indonesia, Mozambique, and some other countries, those are still limited. India imports 58-60 million tonnes of coking coal while producing only 4-5 milion tonnes. Total consumption by the country is 63-65 million tonnes.

India's steel consumption has surged in recent years, posting double-digit growth since 2021-22 (Apr-Mar), Girishkumar Kadam, senior vice president and group head - corporate sector ratings, ICRA said during the discussion. In 2025, Kadam expects consumption of steel to grow about 7-8%. While demand for steel is expected to decline or remain weak across major regions, India's demand is expected to grow in the coming years because of rapid urbanisation and rising income levels.

"...rising urbanisation that will be (a) transformational change in terms of the investments required for the various steel-intensive sectors related to urban infrastructure and housing and that will lead to a significant push for the steel consumption in the country," he said.  End

Reported by Ashutosh Pati and Abhijit Doshi

Edited by Nishant Maher

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