HSBC/S&P Global: Robust Services Growth Signals Steel Sector Resilience Amid Tariff Headwinds

India’s steel industry is poised for a strong FY26, with Global Ratings agencies projecting robust performance despite global trade headwinds. According to recent assessments, higher steel spreads, resilient domestic demand, and limited U.S. exposure are expected to shield Indian steelmakers from the brunt of international tariff escalations.

 

The HSBC/S&P Global June Services PMI came in at 60.4, slightly below the flash estimate of 60.7, but still signaling strong expansion in services—an indicator of broader economic momentum that supports steel consumption in infrastructure, logistics, and real estate.

 

Global Ratings noted that India’s top steel producers are likely to sell more steel in FY26, buoyed by government-led infrastructure spending and a healthy pipeline of private construction projects. The sector is also expected to benefit from improved spreads, thanks to moderating input costs and stable pricing.

 

Key Highlights:
 

June Services PMI: 60.4 (vs flash 60.7) – strong services sector expansion

 

Steel spreads improving due to lower coking coal and iron ore prices

 

Domestic demand to absorb incremental supply from capacity additions

 

India’s steel exports relatively insulated from U.S. tariff risks

 

FY26 outlook: Higher volumes, stable margins, and strong infra-led demand

 

Source: S&P Global Ratings – Indian Steelmakers Outlook