JSW Steel, Jindal Steel Hold Pricing Advantage Over Tata Steel Amid Imports Pressure

The Indian steel industry has remained under pressure due to higher imports from countries like China. Influx from the neighbouring country has caused prices of Indian hot-rolled coil steel—a basic steel product—to fall 20% in the past one year.

Despite this negative price trajectory, steel spreads have been improving due to lower coking coal prices, which have emerged as a saving grace. The lower prices of this key raw material can help steel companies not take a big hit on their profitability. However, JSW Steel Ltd. and Jindal Steel & Power Ltd. have an advantage over Tata Steel Ltd. when it comes to coal.

Domestic hot-rolled coil steel prices have declined to the lowest level since December 2020, largely due to continued high level of imports and muted exports. As of Sept. 23, Indian HRC price stood at Rs 47,100 per tonne. This stands lower by 6% month-on-month and 20% year-on year.

Lower Indian HRC steel prices can have significant implications for companies like Tata Steel, JSW Steel, Jindal Steel & Power and Steel Authority of India. Lower prices directly impact these companies' profitability, as the HRC steel prices determine the price they receive for their products. Lower prices can lead to reduced margins or losses.

Coking coal is a crucial component in the steelmaking process, particularly in the traditional blast furnace method. Its role is indispensable in the Indian steel industry, as it not only acts as a fuel, but also as a reducing agent, and a raw material that helps with the structure of steel products.

India is heavily reliant on imported coking coal to meet its domestic demand, and the cost of this raw material can significantly impact the overall production costs of steel in the country.

As of Sept. 23, coking coal prices were down 13% in the past month to $155 per tonne, trading at a 52-week low. This could help cushion some of the topline price impact that lower domestic coal prices could cause steel companies.

Steel companies like JSW Steel and Jindal Steel & Power, which have higher exposure to external raw material are at an advantage, compared to Tata Steel that has a fair share of captive coal reserves, according to Amit Dixit, lead metal and mining analyst at ICICI Securities Ltd.

Captive coal reserves refer to coal deposits that Tata Steel owns or has exclusive access to. These reserves are typically located close to Tata Steel's plants.

As per the company's annual report, JSW Steel imported 13.01 million tonne of coking coal in fiscal 2024, marking a 17% increase from the previous year.

Jindal Steel & Power, on the other hand, meets 50% of its coking coal requirements from its own captive mines, while the other half from international markets. In Australia, the company runs the Wollongong coking coal mines with an annual capacity of 1.2 million tonne per annum. Its South African mines yield anthracite coal with the same capacity. Additionally, Jindal Steel's Mozambique coal mine has a capacity of 5 million tonne per annum.

India is the world's second largest steel producer, but has remained a net importer of steel for every month in fiscal 2025 so far. As of August 2024, steel imports as a percentage of domestic consumption rose to 7% compared to the five-year average of 4-5%. This has mainly been caused by high steel imports from countries like China, Japan and South Korea. As per ICICI Securities, domestic HRC steel prices are at a 9–11% premium of the landed import prices from the mentioned countries.

Then, there is the exports which have dwindled down to 2% of total production compared to the five-year average of 13%. This has mainly been driven by supply pressure from China and ongoing anti-dumping investigations, as per the brokerage.

However, there might be some government support for Indian steel companies as the Directorate General of Trade Remedies has initiated investigations against Vietnam and China, regarding the imports of carbon steel and certain stainless-steel products, respectively.