ICRA raises India’s steel consumption growth forecast to 9-10% for FY2024/2025

The Indian credit rating agency ICRA has revised its forecast for domestic steel consumption growth in India to 9-10% for FY2024/2025 (ending in March 2025), Business Standard reports.

Previously, this estimate was 7-8%.

The agency’s growth forecast takes into account the latest trends in the sector. Domestic steel consumption in the country increased by 11.3% between February and April 2024.

ICRA noted that while government capital expenditure was healthy until February 2024, other steel-consuming sectors, such as residential construction, contributed to robust demand thereafter.

According to Girishkumar Kadam, Senior Vice President and Head of Corporate Sector Ratings at ICRA, the Indian steel industry has seen its fastest growth period since the global financial crisis over the past three years.

“In FY2023/2024, the industry recorded consumption growth of 13.6%, slightly lower than the peak of 13.9% recorded in FY2025/2006, during the ‘golden period’ of private sector capital investment in India,” he explained.

Demand for steel in the country remains stable despite the elections, so the rating agency has revised its baseline forecast for average steel prices for FY2024/2025 upwards by 2-3% from its previous estimates made in February. This is expected to result in a $12-18 per tonne increase in profits in the current fiscal year.

In the 2023/2024 financial year, ICRA noted, India increased rolled steel imports by 38.2% y/y. Kadam reminded that this way, after a five-year break, the country turned into a net importer of steel.

“Given the weak global growth outlook over the next few quarters, we expect domestic steel imports to grow by around 13-14% in FY2024/2025. This will lead to the country becoming a net importer of steel in the current fiscal year as well,” he said.

As GMK Center reported earlier, India’s steel exports in FY2023/2024 increased by 11.5% y/y – to 7.5 million tons. Steel production for the year reached 143.6 million tons, up 12.9% y/y, and rolled steel production increased by 12.4% y/y – to 138.5 mln