The Business Bytes
THEBUSINESSBYTES BUREAU
NEW DELHI, JANUARY 8, 2025
Amid a global steel demand downturn, India’s steel sector is set to shine with an anticipated 9% growth in 2025, according to a recent report by CRISIL. This remarkable growth is attributed to an uptrend in steel-intensive construction within the housing and infrastructure sectors, alongside robust demand from engineering, packaging, and other industries.
In 2024, India’s steel demand surged by 11%, far outpacing the global average, which saw a decline of approximately 1%. Notably, China, the world’s largest steel producer and consumer, experienced a 3.5% decline in demand, primarily due to reduced activity in the real estate sector despite policy support. Similarly, steel demand in Europe, Japan, and the US contracted by 2-3%.
Developing economies like India and Brazil have played a crucial role in cushioning the global demand from a steeper fall. As per the CRISIL report, global steel demand in 2025 is expected to recover marginally, with an estimated growth of 0.5-1.5%, driven by eased financing conditions and latent demand from key steel-consuming nations. A recovery in residential construction in the EU, US, and Korea is also projected to boost steel consumption.
While demand soars, India’s domestic steel supply struggles to keep pace. In 2024, supply growth from Indian mills was modest at 5.2%, impacted by planned and maintenance shutdowns. The top seven producers recorded a marginal crude production increase of 0.05%, while medium and small players posted more significant growth rates of 14% and 11.3% respectively.
The report highlights a sharp increase in finished steel imports, which rose by 24.5% in 2024, while exports fell by 6.4%. This influx has contributed to a decline in domestic steel prices, with Hot Rolled Coil (HRC) prices dropping by 9% and Cold Rolled Coil (CRC) prices by 7%, impacting the revenue growth of local mills.
Imports from China, Japan, and Vietnam have surged significantly, with HRC imports from China alone skyrocketing 28-fold between 2022 and 2024. Meanwhile, declining coking coal prices, down 12% in 2024, have somewhat alleviated margin pressures for domestic steel producers.
The potential imposition of a safeguard duty could provide a much-needed boost to domestic steel prices. If implemented by February 2025, this measure is expected to elevate steel prices significantly, especially in the year’s first half, enhancing the industry’s profitability.
Sehul Bhatt, Director-Research at CRISIL Market Intelligence and Analytics, said, “The consistent demand growth from long steel end-users underpins the robust outlook for India’s steel sector despite global challenges.”
With India poised to lead global steel demand growth, the country’s steel industry remains a critical driver of economic resilience and infrastructure development in the face of global uncertainties.
