LNG Shortage Threatens Output at Small Indian Steel Mills

Several small steel manufacturers in India are warning of major production cuts as gas supply disruptions linked to escalating Middle East tensions impact liquefied natural gas (LNG) imports. Industry officials say many mills, particularly in Gujarat, rely heavily on imported LNG and are struggling after gas suppliers such as Gujarat Gas declared force majeure and restricted supplies to industrial users.

Manufacturers say the shortage could force output reductions of up to 50% if supplies do not stabilise soon. Triveni Iron and Steel Industries director Yogesh Kanakiya said the company may be forced to halt production if gas availability does not improve within a week. Other firms, including Friends Steel Group, have also raised concerns about shrinking margins and uncertainty around pricing decisions due to the supply crunch.

At the same time, rising coal prices are adding pressure on steel producers across the country. According to the Sponge Iron Manufacturers Association, geopolitical tensions have pushed coal and freight costs up by around 10–12%. India produces about 50 million metric tons of sponge iron annually, a key raw material for secondary steel producers, and higher fuel costs along with gas shortages are tightening margins for smaller mills.

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