Domestic Steel Consumption Set for Robust 9-10% Growth: ICRA

According to ICRA, domestic steel consumption is expected to grow by 9-10% in the financial year 2025. The demand saw a significant rise in the first quarter amidst competitively priced imports. Despite seasonal slowdowns and increased imports, capacity utilization is projected to hit a decadal high.

Domestic steel consumption is projected to grow by 9-10% this fiscal year, according to a report by the rating agency ICRA.

The first quarter of the financial year witnessed robust demand, with consumption growing at 15% year-on-year amidst competitively priced imports.

"ICRA projects domestic steel consumption growth at a healthy 9-10% in FY2025," the agency stated. Seasonal slowdowns during the monsoon and a back-ended government capital expenditure (capex) pick-up may affect the current quarter's demand.

ICRA also expects the industry to see capacity utilization at a decadal high of 88%, despite an all-time-high capacity addition of 15.6 MTPA and a surge in imports. The steel sector has gone through significant growth over the past three years, witnessing the fastest rise since the global financial crisis.

In FY24, the industry recorded a consumption growth of 13.6%, marginally lower than the peak of 13.9% in FY2006. The global steel trade environment significantly impacts the domestic industry, especially given the sub-par economic growth outlook in China and other key markets.

This has redirected steel trade flows to high-growth markets like India, resulting in increasing imports of finished steel since FY23.

(With inputs from agencies.)