Published on January 15, 2025
India’s steel industry is poised for a significant surge in 2025, with demand expected to grow by 8-9% compared to the previous year. This forecast, made by the renowned Indian rating agency Crisil, highlights the dynamic nature of India’s economic landscape, particularly in sectors increasingly reliant on steel.
Drivers of Increased Steel Demand
The anticipated growth in steel demand is primarily driven by a shift towards metal-intensive construction in both the residential and infrastructure sectors. The push for modernization and development in these areas leads to higher steel consumption, crucial for building robust and durable structures.
In addition to residential and infrastructure projects, there has been a notable increase in demand from engineering, packaging, and various other segments. These sectors are expanding rapidly, fueling the need for more steel to support their growth and operations.
Challenges in Domestic Steel Supply
While the demand for steel is rising, there are concerns about the domestic supply chain’s ability to meet this growing need. According to Sekhul Bhatt, Director of Market Research at Crisil Market Intelligence and Analytics, the supply from Indian steel plants grew by 5.2% year-on-year in 2024. However, this growth was tempered by long-planned and preventive maintenance periods, which hindered production capacity.
The agency’s data reveals that the total steel production by the seven largest players in the Indian market saw a negligible increase of 0.05% year-on-year. In contrast, rolled steel production grew by a modest 0.5% year-on-year. Notably, medium and small players in the industry experienced more substantial growth, with steel output increasing by 4% and rolled products output by 11.3%, respectively.
Potential Price Increases and Protective Measures
Crisil’s analysis suggests that steel prices in India may rise by 4-6% in 2025 if a proposed safeguard duty on steel imports is implemented. This duty is intended to limit the influx of cheap steel products from countries like China, thereby supporting domestic producers and stabilizing the local market. Vishal Singh, Research Director at Crisil Market Intelligence and Analytics, notes domestic steel prices have been under pressure due to lower global prices. He expects prices to remain relatively soft in 2025 but acknowledges the potential for growth depending on implementing the safeguard duty.
Historical Context and Future Outlook
In 2024, prices for hot-rolled coils in India fell by 9% year-on-year, while prices for cold-rolled steel dropped by 7% year-on-year. The proposed safeguard duty, which aims to be as high as 25%, is part of a broader strategy to protect the domestic steel industry from an oversupply of cheap imports.
The temporary nature of the safeguard duty reflects the government’s commitment to fostering a competitive and resilient steel sector in India. As the country continues to develop and modernize, the steel demand is expected to remain strong, driving further growth and investment in the industry.
In conclusion, India’s steel demand is set to rise significantly in 2025, driven by robust growth in construction and various industrial sectors. While challenges in domestic supply persist, measures such as the proposed safeguard duty on imports could help stabilize the market and support local producers. The future looks promising for India’s steel industry, with opportunities for growth and development.
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