JSW Steel outlook FY26: demand, margins, 56 mt expansion

Amid a volatile global backdrop and rising trade barriers, JSW Steel is positioning its next phase of growth around India’s demand cycle. In multiple media interactions, joint managing director and CEO Jayant Acharya discussed the near-term margin setup, the role of safeguard duties in supporting domestic pricing, and the company’s capacity addition plans.

The key thread across the comments is that management expects stronger domestic demand to absorb incremental supply, while pricing improvements are expected to offset higher input costs and currency-related pressures. Acharya also reiterated the company’s longer-term expansion ambition, with a target of reaching about 56 million tonnes (mt) of capacity including Ohio, with India at around 55 mt by FY31.

Steel prices: from a six-year low to a recovery

Acharya said steel prices hit a six-year low in December, before improving in the seasonally stronger January to March period. He linked the recovery to a combination of seasonal demand and supportive international pricing.

He also pointed to the imposition of the final safeguard duty at the end of December as a timely factor for domestic prices. According to him, the price advantage began to show up in the March quarter and was expected to flow more fully into the June quarter because the higher price levels in January, February and March would reflect across the full quarter.

In another interaction referencing domestic benchmarks, Acharya cited hot-rolled coil (HRC) prices at around ₹60,000 per tonne on April 23, falling to about ₹52,000 per tonne on April 24 and then dropping further to “48 levels” in September. He later flagged that prices improved after Chinese stimulus, with an October increase of roughly ₹1,000 to ₹2,000 per tonne for flats and longs, respectively. He also noted that domestic HRC prices later corrected to around ₹54,000 per tonne.

Input costs: coking coal, rupee depreciation, and per-tonne inflation

On the cost side, Acharya said coking coal rose quarter-on-quarter by $16 in the March quarter, alongside other cost increases. He also said rupee depreciation impacted costs.

Looking ahead, he estimated costs could rise by roughly ₹3,000 to ₹3,500 per tonne in the June quarter, over and above the increases seen in the March quarter. At the same time, he maintained that the full-quarter benefit of higher steel prices should help offset the cost push and potentially support an additional margin improvement versus the March quarter.

In later comments on the input cycle, Acharya also spoke about a potential softening of coking coal feeding into subsequent quarters, citing an expected drop in the range of $13 to $18, and elsewhere a possible decline of $10 to $15 per tonne.

Margin outlook: cautious optimism without hard guidance

When asked directly about improving EBITDA margins from around 17% and providing guidance, Acharya said it was difficult to give specific guidance due to geopolitical volatility. Still, he framed the base case as pricing covering the higher cost structure and leaving scope for better margins compared with the prior quarter.

In another interview, he said net sales realisation (NSR) fell by more than ₹3,000 per tonne, weighing on EBITDA. But he added that EBITDA from Indian operations improved over the preceding quarter despite these pressures, driven by cost management.

Separately, Acharya cited consolidated EBITDA at ₹9,007 per tonne, with India operations at close to ₹9,200 per tonne, supported by domestic demand and product mix.

India demand: 164 mt base and 7% to 9% growth expectation

Acharya repeatedly emphasised the domestic demand runway. He said India ended the prior year with 164 mt of demand and that the company expects growth in the 7% to 9% range, translating into incremental demand of about 12 to 14 mt.

He also characterised India as the fastest-growing major market for steel demand, supported by economic growth and multi-year infrastructure, manufacturing and renewable-energy buildout. In one interaction, he said Indian steel demand is increasing by about 10 to 12 mt every year.

He attributed the resilience in demand to continued government-led infrastructure creation, and he also pointed to private capital expenditure reviving and international companies looking to build facilities in India.

Capacity additions and operational levers in FY26

To meet rising demand, Acharya said JSW Steel expects to add at least another 3 mt to 3.5 mt of production during the year. He linked this to additional capacities from JSW Vijayanagar Metallics Ltd. (JVML) and capacity augmentation at blast furnace 3 in Vijayanagar.

He also referenced ramp-up in JVML operations and noted that Dolvi and BPSL were doing well in volume terms. In another update tied to FY25 guidance, he said new capacities had come on stream and would ramp up in the second half.

Product mix is also part of the earnings strategy. Acharya said the share of value-added and downstream products, including special products, was at 64%, which he described as value accretive.

Exports, trade barriers, and Europe’s CBAM

On trade measures, Acharya said Chinese exports were among the highest last year and that the safeguard duty levied by the Indian government was helpful. He added that the rest of the world has also responded with increased tariffs.

For JSW Steel’s own allocation, he said exports have been hovering in the 8% to 10% range, with about 90% of capacity allocated to the domestic market.

On Europe’s Carbon Border Adjustment Mechanism (CBAM), Acharya said certain elements of the calculations are still being understood. But he added that JSW Steel has customer relationships in Europe built over more than two to three decades and expects customers to continue sourcing from credible suppliers.

Key figures mentioned by management

Market impact: what the commentary signals

The immediate market variables in the commentary are steel realisations, coking coal costs, and the rupee’s effect on imported inputs. Management’s near-term view is that higher domestic prices, helped by seasonality and safeguards, should cushion margins against cost inflation.

The longer-term market signal is a strong domestic bias in capital allocation. By keeping exports in a single-digit to low double-digit band and targeting capacity of about 55 mt in India by FY31, JSW Steel is tying its growth to India’s steel consumption trajectory rather than external cycles.

Conclusion

Acharya’s comments point to a near-term setup where price recovery and a full-quarter realisation benefit are expected to counter higher coking coal costs and rupee depreciation. Over the medium term, JSW Steel is anchoring expansion plans to India’s demand growth, with additional production expected from Vijayanagar and JVML and a broader FY31 capacity roadmap that includes Ohio.

Next milestones for investors will include how much of the January to March price increase flows through in subsequent quarters, how quickly coking coal softening shows up in costs, and updates on the pace of capacity ramp-ups and capex execution.