India’s Steel Market Growth Propelled by Infrastructure Spend


  • Continued government expenditure on infrastructure projects have positioned India, the world’s second-largest crude steel manufacturer, as one of the rapidly expanding markets for the metal worldwide, despite a worldwide slump in demand.
  • However, steel demand will likely grow by only 7%-10% in FY24-25, which is less than the anticipated 11%-12% growth in FY23-24.
  • Finished steel consumption in India is forecasted to rise by 9% in FY25, following a 12% increase in FY24, as per Fitch Ratings.
  • Despite the slowdown in growth, India is expected to remain the primary global market for steel.
  • India’s steel industry is grappling with increasing raw material costs and rising imports, while a potential downturn in demand could aggravate the situation.

Growth Projections of India’s Steel Industry

High levels of governmental spending on infrastructure projects have boosted India, the second-largest crude steel producer globally, into one of the fastest-growing markets for the alloy. This rise comes despite global demand slowing down.

However, the growth in steel demand is predicted to rise only by a modest 7%-10% in FY24-25, slower than the anticipated 11%-12% in the current fiscal year till March 2024, as per industry analysts and executives.

India’s Political Scenario and Steel Demand

Prime Minister Narendra Modi’s Bharatiya Janata Party will be pushing for a third term in the next general elections slated for early 2024. The elections, the world’s largest democratic exercise, run for several weeks with staggered voting.

Future Steel Consumption

Fitch Ratings forecasted a 9% increase in finished steel consumption in India in FY25, following a 12% rise in FY24. Regardless of the growth rate, India is predicted to continue to be the key growth market globally for steel.

Current Market Conditions

Finished steel consumption reached a five-year peak from April to October with construction activity resuming and strong demand from the automobile sector. Puneet Paliwal, an analyst at London-based CRU Group, states the construction sector has been the main driving force for the Indian steel market.

Challenges Facing the Steel Industry

However, this government-led demand growth for steel may not be sustainable in 2024, particularly in the first half of the coming year, due to the anticipated reduction in government spending. Adding to this, India has seen a steady increase in steel imports, touching a four-year high during April-October. While the industry has advocated for measures to curb imports, the government has said it would monitor the situation. Rising imports and higher raw material costs pose significant challenges for India’s steel mills, and a slowdown in demand could worsen their struggles.

These developments in India’s steel industry could potentially impact the trading environment as they influence the valuation of related assets, presenting both challenges and opportunities for forex traders and investors alike.

PIP Penguin