Steel demand in India will outpace the rest of the world in 2025, Indian rating agency Crisil has stated in a report issued on Thursday, January 16.
Crisil has forecast an 8-9 percent growth in India’s steel demand in 2025, led by the housing and infrastructure sectors in India, compared with global steel demand rising by 0.5-1.5 percent.
However, whether the buoyancy in the domestic market will translate to better numbers for the top producers will depend on the timely implementation of a safeguard duty, the report added.
The top Indian producers, who account for more than half of India’s steel production, are under pressure from a surge in imports of flat steel, which is consumed by the auto and consumer durables sectors.
In contrast, small and medium companies in the steel value chain, which produce long products that are used in the construction industry, are better off as import intensity in this segment is far less than in flat steel, the report said.
While the top Indian producers have been lobbying for a safeguard duty, backed by India’s steel ministry, there is no indication the commerce ministry will agree to it.
“Domestic prices are under pressure because of the global steel price decline and are expected to remain soft in 2025. Prices have a 4-6 percent upside potential hinged on implementation of the safeguard duty,” Crisil said in its report.
Crisil noted that there has been a surge in the imports of hot rolled coil in the last three years in contrast to finished steel previously.
From an exporter of value-added products and speciality steel such as galvanised and coated steel, alloy steel and stainless steel to India, China has switched to exporting hot rolled coil between 2022 and 2024.
While finished steel imports from China increased 2.4-fold, imports of hot rolled coil from China - the feedstock material to produce various value-added downstream products - jumped 28-fold, Crisil noted, adding that these imports are often at a discount to domestic hot rolled coil prices, creating price pressure on domestic steel.
Similarly, overall finished steel imports from Japan and Vietnam increased 2.8-fold and eight-fold in 2024 from the base of 2022, respectively, while hot rolled coil imports from these countries jumped 16.6-fold and 27-fold over the same period, respectively. As a result, hot rolled coil and cold rolled coil prices in India declined by nine percent and seven percent, respectively.