india steel industry: Indian steel industry projects domestic demand to rise 7.5% in current fiscal

India’s domestic steel demand is estimated to grow annually by 7.5% to reach 128.85 million tonnes (mt) in the current financial year. According to estimates by the Indian Steel Association (ISA), domestic steel demand stood at 119.86 mt in fiscal 2022-23. Demand is expected to rise further by 6.3% to reach 136.97 mt in the next financial year 2024-25 as per the ISA projections.

This rise will be driven by a strong momentum in Infrastructure spending and sustained growth in urban consumption. “Steel demand in India will continue to expand by 8-9 million tons each year in two financial years,” the ISA statement said.

Bucking the otherwise gloomy global economic environment, India’s Gross Domestic Product (GDP) is forecast to grow by 6.4% in 2023-24. ISA also said that India has successfully reigned-in inflation that is still plaguing major advanced economies.

The Joint Plant Committee of the Ministry of Steel estimates domestic steel demand or steel consumption from the supply side, by adding finished steel production and imports and then subtracting exports, while the ISA forecast is made from the demand side, in consideration of the steel using sub-sectors. “All the steel using sub-sectors are expected to grow at 6% or above in both FY24 and FY25,” the ISA said.

The rising share of investment in GDP, backed by strong capital expenditure outlay by the government and improving private investments will drive the construction, railways and Capital Goods sector, the statement added.

Budgeted capital expenditure in fiscal 2023-24 rose by 33% to Rs 10 lakh crore, of which 50% has been allocated for road and railway infrastructure.

“This will drive growth in steel demand. Project completion in the real estate sector is also expected to be robust, whilst the government’s push towards affordable housing has seen a 66% increase in outlay,” the ISA said, adding that investments in infrastructure, renewables, mining as well as within the steel sector itself, is expected to benefit the capital goods sector.Consumption driven steel using sectors – automotive and consumer durables – are expected to maintain healthy growth. “The private consumption will largely be sustained by urban consumption while rural consumption is expected to witness a steady recovery,” the ISA noted.

The Intermediate goods sector, which is also dependent on both the automobile sector’s growth as well as exports is more of a mixed bag as the sluggish global demand will limit the potential of the export sector in general.