Indian steel consumption is forecast to grow by 9-10 percent in the fiscal year 2024-25, despite a slowdown since the first quarter, according to a steel sector report issued by Indian rating agency ICRA on Friday, September 13.
The report said that, even though the consumption growth of 15 percent seen in the first quarter (April-June) of the fiscal year 2024-25 has slowed down, consumption will remain robust for the full year.
According to ICRA, capacity utilization in the steel sector will reach a decade-high of around 88 percent in the current fiscal year, despite a record 15.6 million mt of new capacity coming on stream during the year.
ICRA said that India’s steel industry has been on a rapid expansion spree, with 26.3 million mt of new steelmaking capacity added between 2020-21 and 2023-24, and with another 27.5 million mt poised to come on stream between 2024-25 and 2026-27.
Despite rising imports, Indian steelmakers have benefited from a significant drop in in raw material prices. Australian coking coal prices have fallen by 45 per cent from their January 2024 high, while NMDC Limited has slashed iron ore prices by 18 percent from the peak levels seen in the May-June period this year. These cost reductions are expected to support steel spreads, although there may be a temporary contraction in gross spreads by INR 500-1,000/mt in the second quarter of the current fiscal year before improving in the third quarter, the report said.