South India's steel prices show mixed trends w-o-w

• Muted construction, infrastructure sector demand weighs on prices
  
  
• Narrow operating margins support sponge iron prices in Bellary
  
  

Steel prices in southern India witnessed a mixed trend in the week ended 15 May 2026 amid subdued demand from the construction and infrastructure sectors.

Sponge iron prices remained supported amid manufacturers' narrow operating margins, despite subdued buying activity in the finished steel segment. However, overall demand sentiment remained moderate in the market.

Meanwhile, melting scrap prices corrected sharply in southern Indian markets due to weak procurement from steel mills and slow movement of finished steel goods, which continued to pressure overall steel market sentiment.

Sponge iron & melting scrap

Sponge iron prices in the Bellary cluster increased by around INR 100/t w-o-w to approximately INR 25,800/t on 15 May 2026. The price rise was mainly attributed to limited operating margins for sponge iron manufacturers amid elevated production costs.

Despite the slight improvement in prices, demand in southern India remained subdued. Bellary-based manufacturers largely cater to south Indian steel mills; however, lower-priced offers from outstation suppliers continued to affect local demand and restricted fresh procurement activity.

Meanwhile, rising inventory levels at sponge iron plants created additional selling pressure in the market. In order to liquidate stocks and maintain cash flow, several manufacturers were observed concluding bulk advance deals at discounted rates.

On the raw material side, iron ore pellet (Fe-63%) prices remained stable at INR 10,700/t ex-Bellary, while imported RB2 non-coking coal prices were at INR 11,200/t Ex Gangavaram Port, excluding GST and other applicable taxes. High raw material costs continued to pressure manufacturers margins.

In the scrap segment, melting scrap prices in Chennai declined sharply by around INR 1,300/t w-o-w to approximately INR 35,700/t. The correction was mainly driven by limited buying interest from steel mills amid lower-priced alternative metallics and weakening global scrap sentiments.

Globally, Australian-origin HMS 80:20 scrap prices were assessed at around $372/t CNF Chennai as on 15 May 2026, which further weighed on domestic scrap market sentiment.

 

Billet

MS billet prices in southern India fell by around INR 1,000-1,500/t w-o-w amid sluggish buying interest from re-rollers. Weak demand for finished long steel products continued to impact procurement activity, as re-rollers remained cautious in booking fresh billet volumes.

Market participants indicated that the slow movement of finished steel in the construction and infrastructure segments continued to pressure the secondary steel market. Due to weaker offtake of rebar and other long products, re-rollers were operating with limited buying requirements, which negatively affected billet demand across the region.

Further, declining raw material prices, particularly melting scrap, reduced the overall production cost for steel manufacturers. The correction in scrap prices encouraged billet producers to lower their offers in order to remain competitive and maintain sales volumes in a weak market environment.

In addition, conversion margins for re-rollers between billet and rebar prices continued to narrow during the week. Poor finished steel demand and lower realisations in the rebar segment restricted profitability for rolling mills, thereby limiting aggressive billet procurement from the market.

An export deal for around 2,000t of specific-length MS billet was heard concluded by a Chennai-based manufacturer for shipment to Sri Lanka at around $434-439/t FOB.

Rebar

Induction furnace route rebar prices in southern India witnessed a correction of around INR 1,500/t w-o-w in Hyderbad and Chennai due to limited demand from end users and weak buying sentiment. Buyers remained cautious and avoided bulk bookings amid unclear market dynamics and expectations of further price corrections. IF route rebar prices were at around INR 47,000/t ex-Hyderabad.

Lower billet and melting scrap prices also pressured rebar manufacturers to reduce their offers to maintain sales volumes. Slow movement in the construction and infrastructure sectors continued to impact overall finished steel demand across the region.

Meanwhile, blast furnace (BF) route rebar prices continued to hover at around INR 58,000-58,500/t exw in Hyderabad and Chennai, although overall procurement activity remained moderate.

Leading steel manufacturers continue to offer induction route rebars in the local market at prevailing price levels, although selective discounts are being extended in offers to attract buying interest of customers :

Outlook

Steel prices in the coming weeks are expected to remain either stable or witness a slight downward trend amid continued weak market sentiment and slower buying activity across the merchant market.

Ongoing fuel-related disturbances and logistics challenges are likely to continue affecting material movement in several regions. Transportation constraints have particularly impacted long-distance vehicle availability, creating operational difficulties for traders and steel manufacturers.