India scrambles to shield steel sector from deepening LPG crunch

New Delhi — India’s steel ministry has sought intervention from the oil ministry to prevent disruptions to steel production caused by a worsening liquefied petroleum gas (LPG) shortage linked to supply disruptions from the Middle East, a source with direct knowledge said on Thursday.

India, the world’s second-largest crude steel producer, is facing one of its most severe LPG supply crises in decades as shipments from key producers have been affected by the ongoing Iran war, tightening availability of fuel critical for smaller steel units.

“We have taken up with the Ministry of Petroleum and Natural Gas to see within the existing conditions what best can be done,” the source said, adding discussions were ongoing.

Industry participants have warned that prolonged shortages could force production cuts, particularly among small and medium-sized steel producers that rely heavily on LPG.

“If this LPG situation continues, it will not only impact margins but also affect jobs, future investments in value-added steel, and the confidence to commit to long-term contracts, both in India and overseas,” said Vedant Goel, a director at Pune-based Enlight Metals.

India has already invoked emergency measures to prioritise gas supplies for essential sectors after disruptions to liquefied natural gas shipments through the Strait of Hormuz constrained domestic availability.

The supply squeeze has intensified concerns over industrial output stability, as policymakers weigh options to balance energy security with manufacturing demand amid ongoing geopolitical uncertainty.