According to Crisil, Indian Steel Demand Will Outstrip Growth Globally in 2025

Crisil, an Indian rating agency recently released a report predicting a much faster pace in India than the rest of the world in the 2025 growth steel demand. “Steel demand is likely to see 8-9% this year driven by housing and infrastructure growth,” predicted the agency. Whereas, in comparison, the growth in the steel demand globally has been expected at 0.5-1.5 percent in the same period.

Domestic steel consumption in India does look bright, though the report cautions that the benefits would accrue to top producers only if a safeguard duty were imposed. Increasing imports of flat steel have squeezed the market for the leading producers. That is largely used in the auto and consumer durables sectors. These companies account for more than half of India’s steel production and are finding it tough to compete with these imports as global steel prices remain low.

The smaller and medium-sized companies producing long products, mainly used in the construction sector, are relatively better placed. This is due to their lower exposure to imports in this segment. However, despite lobbying by major producers and backing from the steel ministry for a safeguard duty, there is no clear indication that the Commerce Ministry will approve it.

Crisil highlighted that domestic steel prices are currently under pressure due to a global price decline, and the agency expects prices to remain soft throughout 2025. However, prices could see a 4-6% increase if the safeguard duty is successfully implemented.

The report also noted a significant shift in the steel import landscape. Over the past three years, imports of hot rolled coil from countries like China, Japan, and Vietnam have surged dramatically. These imports, often cheaper than domestic steel, have pushed down India’s steel prices. The falling prices of hot rolled and cold rolled coil shed 9% and 7% respectively.

In the next few months, the future of India’s steel producers will depend on the market’s ability to realize the emerging demand in the domestic market.