Iran war raises costs for Indian steelmakers: report

Fuel shortages and freight spikes hit output.

India’s steel sector is coming under pressure from fuel shortages, shipping disruption, and rising input costs linked to the Iran war, according to an analysis published by the World Economic Forum (WEF).

Analysts from the Institute for Energy Economics and Financial Analysis said India’s dependence on imported crude oil, liquefied natural gas (LNG), liquefied petroleum gas, and metallurgical coal had left steelmakers exposed to disruption across Middle East trade routes, including the Strait of Hormuz.

It said some smaller steelmakers reliant on LNG had already cut production, whilst some JSW Steel units had also been affected by gas shortages, with one unit at risk of shutdown.

ArcelorMittal Nippon Steel India was highlighted as particularly exposed because about 65% of its 9 million tonnes per annum steelmaking capacity is tied to gas-based direct reduced iron and electric arc furnace operations.

WEF said India imports about 90% of its metallurgical coal needs, mostly from Australia, leaving mills vulnerable to higher delivered costs as freight and insurance rates rise.

It added that capesize freight rates climbed from $9.80 to $12.20 per tonne within the initial weeks of March 2026, pushing up the landed cost of coking coal and iron ore and prompting domestic steel price increases.

Analysts also said about 20% to 22%, or 0.5 mt, of India’s metal scrap imports from conflict-hit West Asia had been disrupted, whilst iron ore imports were now expected to reach a seven-year high in FY2025-26.

It argued that India needed to strengthen domestic energy, scrap and iron ore security, and reduce long-term dependence on imported fossil-linked steelmaking inputs.