India to Lead Steel Demand Growth with 8-9% Rise in 2025: CRISIL

India is set to outpace other major steel-consuming economies in 2025, with demand projected to grow by 8-9%, according to CRISIL’s Market Intelligence and Analytics report.

This growth will be propelled by a shift toward steel-intensive construction in the housing and infrastructure sectors, coupled with rising demand from engineering, packaging, and other segments.

However, the report highlights a significant challenge: domestic steel supply remains a "point of concern." In 2024, demand surged by an estimated 11%, but competitive imports and a dip in exports hampered production growth.

Import Surge: A Game-Changer

India’s finished steel imports skyrocketed by 24.5% in 2024, while exports declined by 6.4%, resulting in an additional 3.2 million tonnes of finished steel availability. This accounted for 2% of the total demand. Key exporters, including China, Japan, and Vietnam, significantly increased their steel shipments to India.

• China: Traditionally focused on value-added products like galvanised, coated, alloy, and stainless steel, China has dramatically increased its exports of hot-rolled coils (HRC) to India. Between 2022 and 2024, China’s finished steel exports rose 2.4-fold, with HRC imports spiking 28-fold.
• Japan: Japan’s finished steel exports to India surged 2.8-fold, while HRC imports jumped 16.6-fold in 2024 compared to 2022.
• Vietnam: Imports from Vietnam grew eightfold, with HRC imports rising 27-fold.

Impact on Domestic Industry

The influx of cheaper imported steel, particularly HRC, has intensified price pressures on Indian mills. Domestic HRC prices dropped by 9%, while cold-rolled coil (CRC) prices fell by 7% in 2024. This weakened the topline growth of domestic mills, although declining coking coal prices helped mitigate margin pressures.

Raw Material Dynamics

While iron ore prices rose by 9-10% in 2024, the spot price of Australian-origin coking coal for the Premium Low Volatility grade fell by 12%, easing cost pressures. Meanwhile, China’s HRC export prices declined by 12%, remaining lower than domestic prices, further intensifying competition.

Industry Outlook for 2025

The report underscores the potential benefits of imposing a safeguard duty on steel imports, as proposed by the industry. If implemented, steel prices in 2025 are expected to rise significantly, particularly in the first half of the year. This measure could shield domestic mills from aggressive price competition and strengthen the industry’s position.

With robust demand growth and the potential for protective measures, the Indian steel industry is poised for a dynamic year in 2025. However, navigating supply challenges and import competition will be critical for sustaining growth.