CRISIL Predicts 8-9% Growth in India’s Steel Demand in 2025
India is expected to continue outpacing other major steel-consuming nations in terms of demand growth in 2025, with an anticipated increase of 8-9 percent, according to a recent report by CRISIL Market Intelligence and Analytics. This robust demand growth is attributed to a marked shift towards steel-intensive construction, particularly in housing and infrastructure sectors, as well as heightened demand from engineering, packaging, and other industrial segments.
The report, however, notes that while the demand for steel is poised to rise significantly, domestic supply could remain a concern. It highlights that in 2024, steel demand in India increased by an impressive 11 percent, but there were challenges on the production front. A key factor contributing to weaker growth was the rise in competitive imports and a decline in steel exports. In particular, finished steel imports surged by 24.5 percent, while steel exports dropped by 6.4 percent, leading to an additional 3.2 million tonnes of finished steel entering the domestic market. This surge in imports accounted for 2 percent of India’s total finished steel demand. The report also reveals a significant increase in finished steel imports from key global exporters. China, traditionally an exporter of value-added products such as galvanised, coated, and stainless steel, has seen a dramatic rise in its steel exports to India. Between 2022 and 2024, finished steel imports from China more than doubled, with hot-rolled coil (HRC) imports jumping 28-fold.
HRC is used as raw material for producing downstream steel products, and the imports, often priced lower than domestic steel, have exerted downward pressure on domestic steel prices. Similarly, imports from Japan and Vietnam have risen significantly, with Japan’s finished steel imports increasing 2.8-fold and HRC imports soaring 16.6-fold. Finished steel imports from Vietnam surged eightfold, with HRC imports increasing by 27 times. The influx of imports has contributed to a decline in domestic steel prices, with HRC prices falling by 9 percent and cold-rolled coil (CRC) prices dropping by 7 percent in 2024. This decline in prices has led to slower top-line growth for domestic steel manufacturers. However, the report notes that the decreasing prices of coking coal, which dropped by 12 percent in 2024, have helped ease margin pressures for steel producers.
Iron ore prices, meanwhile, are expected to rise by 9-10 percent in the upcoming period, which could further impact steel production costs. Notably, the price of Chinese HRC exports also fell by 12 percent in 2024, continuing to remain lower than domestic mill prices, adding to the competitive pressure on India’s steel industry. The report suggests that the imposition of a safeguard duty on steel imports, as proposed by the industry, could offer a positive boost to domestic steel prices in 2025. If implemented, steel prices are expected to rise significantly, particularly in the first half of the year.
