Steel capacity utilization in India to hit 4-year low – ICRA

Capacity utilization in India’s steel industry in 2024/2025 (ending in March 2025) may fall below 80% for the first time in four years due to rising volumes of cheap imports. This is the forecast of the Indian rating agency ICRA.

In the post-covid period, the Indian steel industry was able to maintain capacity utilization of more than 80%, a strong investment portfolio and comfortable debt levels for three consecutive years between 2021-2022 and 2023-2024.

However, a surge in cheap imports has led to a decline in the market share of local steelmakers.

“Coupled with record current expansion plans, the industry’s capacity utilization is expected to fall from 85% percent in FY2023/2024 to around 78% in FY2024, the lowest in four years,” said Girishkumar Kadam, Senior Vice President and Head of Corporate Sector Ratings at ICRA.

Given the low economic growth prospects of China and other leading global steel production and consumption centers, steel trade flows have been redirected to high-growth markets such as India, ICRA notes.

The rating agency notes that an increase in capacity by 90-95 million tons per year, which involves investments of $45-50 billion, may face the risk of a slowdown if the country’s steel mills’ profits do not increase from previous levels.

India has increased its imports of rolled steel products to a 7-year high of 5.7 million tons since the beginning of the 2024/2025 fiscal year (April-October 2024).

The world’s second-largest steel producer continues to maintain its status as a net importer of steel, which was established in FY2023/2024. China is the key supplier of rolled steel to the Indian market.

As GMK Center reported earlier, the country’s Ministry of Steel has proposed a 25% safeguard duty on imports of certain steel products, which may be a response to concerns of local steelmakers about the increase in the supply of cheap steel products from abroad.