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| ICRA CEO |
India's steel consumption is expected to exceed initial forecasts this year on the back of continued growth in manufacturing, energy transition and sustained government investment in infrastructure.
India's credit rating agency ICRA has revised its forecast for India's domestic steel consumption growth in fiscal year 2025 (April 2024 - March 2025) to 9-10% from its earlier estimate of 7-8%.
ICRA's updated forecast takes into account the latest trends, with India's domestic steel consumption growing by 11.3% y-o-y from February to April this year.
ICRA noted that increased fiscal spending by the Modi government ahead of the elections drove the increase in steel consumption until February. From March onwards, despite a reduction in government spending, robust private housing markets and high growth rates in manufacturing sectors, including automobiles and white goods, continued to drive steel consumption.
Girishkumar Kadam, Senior Vice President and Corporate Sector Head, ICRA, said that India's steel industry has experienced its fastest growth in three years since the global financial crisis.
Kadam explained that the steel industry recorded a consumption growth rate of 13.6% in FY2024, slightly lower than the peak of 13.9% recorded in FY2006 during the "golden era" of private sector investment in India.
With domestic steel demand expected to remain stable this year, market research firms in India, including ICRA, have upwardly revised their average domestic steel price estimates for FY2025 by 2-3% from their previous projections in February. This is expected to result in an increased profit of $12-18 per tonne for the current fiscal year.
ICRA also reported that rolled steel imports into India in FY2024 will increase by 38.2% year-on-year.
Mr. Kadam pointed out that while India's steel demand has surged, inadequate production capacity for specialty and rolled steel has led to a significant increase in imports, making India a net importer of steel in the last fiscal.
He added that given the weak global growth outlook over the next few quarters, India's steel imports are expected to increase by about 13-14% y-o-y in FY 2025, keeping India a net importer of steel in that fiscal as well.
In FY2024, India's steel production increased by 12.9% y-o-y to 143.6 million tons, rolled steel production increased by 12.4% y-o-y to 138.5 million tons, and steel exports increased by 11.5% y-o-y to 7.5 million tons.
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