ICRA Forecasts Deceleration in Indian Steel Consumption Growth to 7-8% in FY2025 After Three Years of Double-Digit Surge

Domestic steel consumption in India is expected to slow down to 7-8% in the fiscal year 2025, according to ICRA, a rating agency. This comes after three consecutive years of strong double-digit growth in steel consumption. In the fiscal years 2022 and 2023, the growth rate was 11.4% and 13.3%, respectively. In the first 10 months of fiscal year 2024, steel consumption is anticipated to have grown by a robust 14.5%. ICRA predicts the fiscal year will end with a 12-13% year-on-year growth, reaching over 120 million tonnes.

However, in fiscal year 2025, the growth is expected to slow down to 7-8%, a departure from the rapid expansion seen in recent years. The period between June and November 2023 saw accelerated infrastructure spending by the government, resulting in a 16% growth in domestic steel demand. Yet, the growth rate slowed to 6.5% in December 2023 and January 2024, indicating a potential softening of demand in the next two quarters, especially around the time of the Union Elections.


ICRA highlights potential challenges for steel manufacturers in the next fiscal year, including a softness in steel prices, high input costs, a temporary slowdown in domestic demand, and a challenging external environment. The operating conditions may be further complicated by volatile raw material prices, particularly for coal.

Despite these challenges, the steel industry has been rapidly expanding its capacity. Between fiscal years 2021 and 2023, around 15.3 million tonnes per annum (mtpa) of steel manufacturing capacity were added. Another 38.5 mtpa is expected to be added between fiscal years 2024 and 2027. This rapid capacity expansion is unprecedented in India, with an expected addition of 11 mtpa in the current fiscal year and an even higher 15.6 mtpa in fiscal year 2025. However, this large capacity increase has been balanced by incremental demand, resulting in high industry utilization levels of around 88% in fiscal year 2024 and an estimated 87% in fiscal year 2025, according to ICRA.

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