Steel Consumption Expected To Climb 9-10% Amid Strong First Quarter Growth, Says ICRA Report

India's steel consumption would increase by 9-10% in the current fiscal year, according to ICRA.

Steel demand showed strong performance in the first quarter of the current financial year, with a 15% year-on-year growth, buoyed by competitively priced imports.

ICRA has projected a robust growth of 9-10% in domestic steel consumption for financial year 2025. However, demand may experience a temporary slowdown this quarter due to seasonal factors related to the monsoon, though it is expected to pick up later as government capital expenditure potentially ramps up.

Over the past three years, the steel sector has experienced its fastest growth since the global financial crisis.

"ICRA expects the industry to witness capacity utilisation at a decadal high of 88% in spite of an all-time-high-capacity addition of 15.6 MTPA (million tonnes per annum) in financial year 2025 as well as the surge in imports," the rating agency said.

In fiscal 2024, the industry registered a consumption growth of 13.6%, which is only marginally lower than the peak of 13.9% registered in Financial year 2006 during the golden period of the country's private sector capex.

Steel being a globally traded commodity, the external environment, therefore, plays a crucial role in determining the health of the domestic industry.

Given the sub-par economic growth outlook in China, along with other leading global steel-producing and consuming hubs, steel trade flows have been redirected to high-growth markets like India. Consequently, domestic finished steel imports have been steadily rising since fiscal 2023.

(With inputs from PTI.)