【Ferro-alloys.com】：India steel production cuts could soon become inevitable as small and medium- sized steel mills warn that disruptions in naturalgas supplies linked to the war in the Middle East are already affecting operations.

Following supply interruptions along key LNG trade routes, the Indian govemment has introduced new regulations prioritizing gasallocation for essential sectors However. the steel industy has not been incuded among these priority sectors, ralising seriousconcerns among producers.

Steel mills warn of 50 percent production cuts

Industy participants say that steel production in the small and medium mll segment could decline sharply in the coming days ifgas supply conditions do not improve.

Several producers have already warned that output reductions of up to 50 percent may occur within days.

We are looking at a 50 percent production cut as of now and a complete halt ahead if supplies dont improve within a week, saidYogesh Kanakiya, director at Triveni Iron and Steel Industries.

Small and medum steel mills are partcularly unerable to energy disruptions because they typically operate on tight operatingmargins and limited inventory buffers.

Anshum Goyal, managing director at Friends Steel Group in Guarat, highighted the financial pressure facing producersWe work on wafer-thin margins and our margins have shrunk We are concemed over gas supplies and it is affecting our decisiormaking in terms of prices.

Government introduces natural gas regulation order

In response to supply disruptions, the Indan government introduced new gas supply regulations to manage the countrys limitedenergy resources.

Under the Natural Gas (Supply Regulation) Order, 2026, the Indian authonities will regulate distribution across sectors to ensurethat essential services continue to receive adequate energy supply.

Priority sectors for gas allocation incude domestic piped natural gas (PNG), compressed natural gas (CNG) used in transport.liquefied petroleum gas (LPG) production, and essential pipeline operations. According to the regulation, these sectors mayreceive up to 100 percent of their average gas consumption over the past six months, subject to operational availability. Notably,the steel industry has not been included in the priority allocation list.

LNG supply disruptions linked to Strait of Hormuz

The regulation follows disruptions in LNG shipments caused by the war in the Middle East, which has affected maritime energytraderoutes.

According to the Indian Ministry of Petroleum and Natural Gas, liquefied naural gas shipments passing through the Strait ofHormuz have been disrupted and some suppliers have invoked force majeure clauses, indicating supply constraints beyond theircontrol.

Key energy dependency

Amajor concern for Indias energy security is its reliance on Middle Easter LNG, with the share of LNG sourced through the Middle East standing at approximately 40 percent.

These disruptions have triggered concerns about industrial fuel shortages, particularly for sectors such as steel that rely heavly onnatural gas in certain production processes.

Potential implications for India's steel sector

If gas supply shortages persist, the consequences for India's steel industry could include

Significant production cuts among smaller mills

Higher steel production costs

Possible supply tightening in domestic steel markets

Greater price volatility

Small and medium steel producers are typicaly more exposed to energy disruptions compared with large integrated steelmakersthat rely more heavily on coal-based blast furnace operations.

• [Editor:Alakay]