India's Steel Demand to Soar by 8-9% in 2025, Outpacing Global Competitors
India's steel demand is set to grow by 8-9% in 2025, outpacing other major economies like China, Europe, and the US. Driven by a surge in steel-intensive construction and robust demand from various sectors, this growth is expected to mitigate the impact o
Steel DemandIndia2025ConstructionGlobal SteelReal EstateJan 08, 2025
This outpaces other major steel-consuming economies such as China, Europe, and the US.
The growth is primarily driven by a shift towards steel-intensive construction in the housing and infrastructure sectors, along with increased demand from engineering, packaging, and other segments.
In 2024, global steel demand saw a decline of approximately 1%, with China, the largest producer and consumer, experiencing a 3.5% drop due to reduced demand from the real estate sector, despite supportive policy measures.
Meanwhile, Europe, Japan, and the US reported demand degrowth of 2-3%.
However, developing economies like India and Brazil managed to keep global demand from plummeting.
India's demand increased by 11%, while Brazil saw a 5.6% rise, and other steel-consuming economies recorded a 2.7% increase.
For 2025, global steel demand is forecast to inch up by 0.5-1.5% as financing conditions ease and pent-up demand from key economies supports manufacturing activities.
Economies such as the EU, US, and Korea are expected to see a recovery in residential construction, further boosting demand.
India, however, will continue to lead the pack in terms of demand growth.
Despite the positive outlook, domestic supply remains a concern.
Sehul Bhatt, Director-Research at CRISIL Market Intelligence and Analytics, noted that in 2024, supply growth from India’s mills was limited at 5.2%, with extended periods of planned and maintenance shutdowns.
Aggregate crude production by the top seven players increased by a mere 0.05%, while finished steel production rose by 0.5%.
However, production from medium and small players surged by 14% and 11.3%, respectively, indicating strong demand from long steel end-users.
Another challenge is the competitive imports and declining exports, which contributed to weaker production growth in 2024.
Finished steel imports increased by 24.5%, while exports declined by 6.4%, leading to an additional 3.2 million tonnes of finished steel available domestically.
This accounted for around 2% of the total finished steel demand.
Notably, finished steel imports from key exporters to India have risen significantly in recent years.
China, traditionally an exporter of value-added products, has seen a 2.4-fold increase in finished steel imports and a 28-fold jump in HRC imports from 2022 to 2024.
Similarly, imports from Japan and Vietnam have surged, with HRC imports from Japan increasing 16.6-fold and from Vietnam 27-fold.
South Korea's share in India's finished steel import basket has decreased due to modest growth.
The increase in net imports has pressured domestic steel prices.
In 2024, HRC prices declined by 9%, and CRC prices by 7%, leading to a slowdown in the topline growth of domestic mills.
However, falling coking coal prices and low volatility have somewhat alleviated margin pressure.
Coking coal spot prices for Premium Low Volatility grade, Australia-origin, decreased by 12%, while iron ore prices increased by 9-10%.
China HRC export prices fell by 12% and remain at a discount to domestic mill prices.
CRISIL anticipates that the proposed safeguard duty, expected to be implemented by the end of February, will positively impact steel prices in 2025, particularly in the first half.
Vishal Singh, Director-Research at CRISIL Market Intelligence and Analytics, stated that while domestic prices are under pressure, they have a 4-6% upside potential, contingent on the implementation of the safeguard duty.
As mills ramp up production from new capacities, flat steel prices will likely rise, but intense competition could limit the upward movement.
Frequently Asked Questions
What is the expected growth rate of steel demand in India for 2025?
India's steel demand is expected to grow by 8-9% in 2025, according to a CRISIL report.
What factors are driving the growth in India's steel demand?
The growth is primarily driven by a shift towards steel-intensive construction in the housing and infrastructure sectors, along with increased demand from engineering, packaging, and other segments.
How did China's steel demand perform in 2024?
China's steel demand declined by 3.5% in 2024, mainly due to reduced demand from the real estate sector, despite supportive policy measures.
What challenges does the Indian steel industry face in 2025?
The industry faces challenges such as limited domestic supply growth, competitive imports, and declining exports. Additionally, domestic steel prices are under pressure due to global price declines.
What is the proposed safeguard duty, and how will it impact steel prices in 2025?
The proposed safeguard duty, expected to be implemented by the end of February, aims to protect domestic steel producers by increasing import costs. This could lead to a 4-6% upside potential in domestic steel prices in 2025, particularly in the first half.
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