Steel demand in India will continue to outpace other major steel consuming economies in calendar year 2025 with a growth of 8-9%, 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 ~1%. Demand in China, the largest steel producer and consumer, declined ~3.5%, led by declining steel demand from real estate sector, despite conducive policy changes and release of support packages. Steel demand from Europe, Japan and the US also logged an estimated demand degrowth of 2-3%. However, demand growth in developing economies such as India and Brazil kept global demand from declining steeply. Demand is estimated to have increased 11% in India, 5.6% in Brazil and 2.7% in other steel consuming economies.

In 2025, global steel demand is expected to inch up by 0.5-1.5% on the back of easing financing conditions and pent-up demand from some key steel consuming economies, which will support manufacturing activities. An anticipated recovery in residential construction in economies such as EU, US and Korea in line with easing of financing conditions will support growth, too. India will continue to lead the pack in terms of demand.

Domestic supply, however, remains a point of concern.

Says Sehul Bhatt, Director- Research, CRISIL Market Intelligence and Analytics, “In 2024, supply growth from India’s mills was benign at 5.2%, with extended periods of planned and maintenance shutdowns. Aggregate crude production growth by the top seven players^* remained flat during the year. However, crude and finished steel production from medium and small players increased 14% and 11.3%, highlighting the consistent demand growth from long steel end-users.”

Competitive imports and decline in exports also played a role in weaker production growth in 2024. While finished steel imports increased 24.5%, exports declined 6.4%, leading to additional availability of 3.2 million tonnes of finished steel apart from domestic production. This additional material availability accounted for ~2% of the total finished steel demand.

To be sure, 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, import 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.

Domestic steel prices, meanwhile, declined in 2024, impacted by additional material availability due to increase in net imports. HRC prices declined 9% and CRC prices declined 7%, 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% in 2024, whereas iron ore prices are estimated to have increased by 9-10% during the period. Notably, China HRC export prices declined 12% in 2024 and are still trading at a discount to domestic mill prices.

Imposition of a safeguard duty proposed by the industry could be a positive here. If implemented, steel prices in 2025 would be much higher than 2024, with the impact more prominent in the first half.

Says Vishal Singh, Manager-Research, CRISIL Market Intelligence and Analytics, “Domestic prices are under pressure due to global steel price decline and are expected to remain soft in 2025. Prices have a 4-6% 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.”

^*Top 7 players include JSW Steel group, Tata Steel group, SAIL, AM/NS India, Jindal Steel and Power Limited, RINL and NMDC Steel; HRC – 2.5-8mm IS2062; CRC – 0.9mm IS513