After 3 years, Steel demand to grow in single digits in 2024-25

Domestic demand has already been slowing over December and January, when it grew just 6.5%, after six months of about 16% growth.  | Photo Credit: K. Ananthan

With imports from China and Vietnam rising since last October, India is likely to be a net finished steel importer in 2023-24 after a gap of five years, and is likely to remain so in the coming year as well unless the external demand environment improves meaningfully, rating agency ICRA has said.

Moreover, domestic steel consumption growth is expected to slide to 7%-8% after three years of double-digit growth, down from about 12%-13% this year, while higher input costs and soft steel prices will squeeze operating profit for margins for producers by 110-115 basis points in 2024-25, it said in a research note.

Domestic demand has already been slowing over December and January, when it grew just 6.5%, after six months of about 16% growth. “While these are early trends, these numbers nonetheless hint at demand remaining soft over the next two quarters as the government spending moderates around the election period,” remarked Jayanta Roy, senior vice president and group head of corporate sector ratings at ICRA.

On the external front, steelmakers remain on tenterhooks, the firm said, as multiple structural headwinds in China have propelled its steel exports to a seven-year high in 2023. “With most other large steel-consuming hubs globally also facing subpar economic activities in the near term, global steel trade flows have been increasingly redirected to high-growth markets like India,” the note said.