India will witness more demand for steel in comparison to other major steel consuming economies in the calendar year 2025, with a growth of 8-9 per cent, stated a report by CRISIL. The growth, it added, will be driven by a shift towards steel-intensive construction in the housing and infrastructure sectors along with better demand from engineering, packaging and other segments.
In 2024, global steel demand is estimated to have declined by approximately 1 per cent. In terms of different economies, China, which is the largest steel producer and consumer, saw a demand decline of around 3.5 per cent led by declining steel demand from the real estate sector, despite conducive policy changes and release of support packages. Steel demand from Europe, Japan and the US also reported a demand degrowth of 2-3 per cent. However, per the report, demand growth in developing economies such as India and Brazil kept global demand from declining steeply. While the demand in India is estimated to have increased by 11 per cent, Brazil saw an increase of 5.6 per cent and other steel consuming economies are estimated to have clocked a rise of 2.7 per cent.
Now in 2025, global steel demand is expected to inch up by 0.5-1.5 per cent on the back of easing financing conditions and pent-up demand from some key steel consuming economies, which will support manufacturing activities. With economies such as the EU, US and Korea expected to see a recovery in residential construction, and with easing of financing conditions, the demand is anticipated to grow. India will continue to lead the pack in terms of demand.
Domestic supply, however, remains a point of concern, stated CRISIL. Sehul Bhatt, Director-Research at CRISIL Market Intelligence and Analytics, said, “In 2024, supply growth from India’s mills was benign at 5.2 per cent, with extended periods of planned and maintenance shutdowns. Aggregate crude production by the top seven players increased 0.05 per cent, while finished steel production increased 0.5 per cent. However, crude and finished steel production from medium and small players increased 14 per cent and 11.3 per cent, highlighting the consistent demand growth from long steel end-users.”
Competitive imports, declining exports
Further, competitive imports and decline in exports also played a role in weaker production growth in 2024. While finished steel imports increased 24.5per cent, exports declined 6.4 per cent, leading to additional availability of 3.2 million tonnes of finished steel apart from domestic production. This additional material availability accounted for around 2 per cent of the total finished steel demand.
It is worth noting that finished steel imports from all key exporters to India have increased significantly in the past few years. For instance, China has traditionally been an exporter of value-added products and speciality steel such as galvanised and coated steel, alloy steel and stainless steel to India, with minimal share of hot-rolled coil and strips (HRC), cold-rolled coils and strips (CRC). However, between 2022 and 2024, while finished steel imports from China increased 2.4-fold, imports of HRC jumped 28-fold. Notably, HRC is used as feed material to produce various value-added downstream products, and these imports are often at a discount to domestic HRC prices, creating price pressure on domestic steel.
Similarly, the overall finished steel import from Japan increased 2.8-fold in 2024 from the base of 2022, while HRC imports increased 16.6-fold. Finished steel imports from Vietnam increased 8-fold, while HRC imports jumped 27-fold. Import growth from South Korea was relatively modest, bringing down its share in India’s finished steel import basket.
Steel prices
Impacted by additional material availability due to increase in net imports, CRISIL stated that the domestic steel prices declined in 2024. HRC prices declined 9 per cent and CRC prices declined 7 per cent, thereby slowing topline growth of domestic mills. That said, falling coking coal prices, along with low volatility, have helped reduce margin pressure somewhat. Coking coal spot price for the Premium Low Volatility grade, Australia-origin, declined 12 per cent in 2024, whereas iron ore prices are estimated to have increased by 9-10 per cent during the period. Notably, China HRC export prices declined 12 per cent in 2024 and are still trading at a discount to domestic mill prices.
According to CRISIL, the imposition of a safeguard duty proposed by the industry could be positive here. With the same anticipated to be implemented by the end of February, CRISIL said, steel prices in 2025 would be much higher than 2024, with the impact more prominent in the first half.
Vishal Singh, Director-Research at CRISIL Market Intelligence and Analytics, said, “Domestic prices are under pressure due to global steel price decline and are expected to remain soft in 2025. Prices have a 4-6 per cent upside potential hinged on implementation of the safeguard duty. As mills ramp up production volume from the newly commissioned capacities, increase in supply will reduce flat steel prices but will still be higher than average price of 2024. That said, intense competition among mills to gain market share could limit the upward movement.”