Indian steel, cement companies may see supply chain risk amid Iran crisis

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• Gulf crisis threatens raw material supply for Indian steel, cement firms
• Hormuz conflict halts limestone, gypsum shipments to India
• Cement margins may drop due to rising petcoke and coal prices.

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As crisis escalates in Iran, Indian steel and cement players stare at potential supply chain squeeze of key raw materials -limestone and gypsum-for which the country heavily depends on the Middle East.

As of March 3, 2026, a direct military escalation between the US, Israel, and Iran has severely compromised the Strait of Hormuz, the primary artery for Gulf mineral exports. This conflict has caused unprecedented logistical disruptions at Ras Al Khaimah 's (RAK) Mina Saqr Port—the primary exit point for the UAE's massive limestone reserves, which accounted for 79 percent of India's limestone flux imports in 2023.

Even though India produces a vast volume of limestone to support its large, third-ranked global cement industry, it is also a significant importer of the raw material for high grade requirements, particularly for steel companies.

Malaysia, Indonesia other options

"For steel companies, the limestone supply is mainly from the UAE but with the closure of the Strait of Hormuz, the shipments are impacted. Ship owners are refusing to make ships available because insurers are backing out and supply from alternative routes will be expensive.

The companies may temporarily pivot to Oman for supplies and there are also some low silica reserves in Rajasthan. Companies are also looking to import the raw material from Malaysia or Indonesia, but at a later stage, if the conflict persists for a long time. For now, steel makers would have minimum limestone reserves for one and half month," said an industry source.

According to government data, imports of this critical limestone flux grew by 13.98 percent in 2024-2025, reaching a value of $324.80 million. Limestone is a critical input in steel manufacturing, and large Indian steel producers, including companies within the Jindal Group, routinely import bulk quantities to meet production requirements.

"Steel companies largely rely on the Middle East for the steel grade limestone supplies because it is cheaper and accessible, but with the escalation of war, companies might opt for alternative sources or rely on domestic sources but that would raise raw material costs," said an industry observer, adding that there is always a contingency plan in place for the steel majors.

Why Middle East is a better route

For a steel manufacturer, this "flux" is the chemical key that unlocks purity in molten metal and for a steel plant on the coast, it is actually cheaper and faster to bring stone across the ocean from the Middle East than to haul it by train across India. While major industrial buyers have the capability to procure raw materials directly, many transactions are facilitated through trading intermediaries that connect buyers with overseas producers and manage end-to-end logistics.

According to data from global trade intelligence platform Volza, high volume buyers of the key raw material include Tata Steel, JSW Steel and Bhushan Power and Steel.

Beyond limestone, gypsum is a critical additive for controlling the setting time of cement. Much of the high-quality gypsum used by Indian players is sourced from the same region; a blockade would force plants to scramble for domestic synthetic or mineral alternatives.

According to commerce ministry data, India’s imports of Natural Gypsum and Anhydrite grew by 8.32 percent, rising from import value of $142.41 million to $154.26 million.

'Gypsum disruption may not hit bottom lines much'

However, analysts say that gypsum disruption may not cause a huge impact on the bottom lines as it comprises a small portion of the total cost. But the rise in petcoke and coal costs could hurt margins for companies.

"Ongoing geopolitical tensions in the Middle East led to a ~11 percent MoM (month over month) jump in spot pet coke prices to ~$135 per tonne. We believe cement companies may not see an immediate impact on margins (owing to 30-45 days of fuel inventory and availability of domestic fuel sources). However, elevated fuel prices can dilute operating-leverage benefits, particularly in the first quarter of financial year 2027 estimates (Q1 FY27E)", brokerage Emkay Securities wrote in a note on March 5.

"For cement companies, a major hit will be from the increased petcoke and coal prices due to the war. The companies hold inventory for at least 45-50 days, so any impact will come with a lag. We might see some impact in the third or fourth quarter, if they don't increase cement prices. Gypsum is used in small portions so its supply impact may not be significant," said Uttam Kumar Srimal, Senior Research Analyst, Axis Securities.

To mitigate these pressures, leading cement companies are focusing on improving logistics efficiency, optimising energy usage, and increasing the use of domestic alternatives such as phosphogypsum and fly ash, said  Ajit Mishra – SVP, Research, Religare Broking Ltd.