India's Steel Demand Expected to Grow by 7.5% in Current Financial Year: Indian Steel Association
The Indian Steel Association (ISA) has projected that the domestic steel demand in the current financial year will witness a growth of 7.5%, reaching 128.85 million tonnes (MT). According to the ISA, India's total steel demand for FY23 stood at 119.86 MT.
In a statement issued on May 26, the ISA stated, "Driven by a strong momentum in infrastructure spending and sustained growth in urban consumption, steel demand in India will continue to expand by 8-9 million tons each year in the next two financial years, resulting in an expected growth of 7.5% in 2023-24 and 6.3% in 2024-25."
The association further predicts that India's steel demand for FY25 will reach 136.97 MT, growing at a rate of 6.3%.
Highlighting India's resilience in the global economic landscape, the ISA said, "In an otherwise gloomy global economic environment, India has been a bright spot, defying global trends. India has also successfully reigned in inflation that is still plaguing major advanced economies." It added, "The steel sector has benefited from strong economic growth as the correlation between growth in steel demand and GDP growth is quite strong, especially if the economy grows by around 6% or more with the multiplier being more than one in such scenarios." The ISA's forecast is based on the demand side, taking into account the steel-using sub-sectors. It expects all steel-using sub-sectors to grow at a rate of 6% or higher in both FY24 and FY25.
The association anticipates that the increasing share of investment in GDP, supported by robust government capital expenditure and improved private investments, will drive growth in the construction, railways, and capital goods sectors.
Furthermore, the ISA expects sustained healthy growth in the consumption-driven steel-using sectors, such as automotive and consumer durables. It notes that private consumption will mainly be sustained by urban consumption, while rural consumption is expected to witness a steady recovery.
Regarding the intermediate goods sector, the ISA suggests that the global demand slowdown may limit the export sector's potential. However, growth in this sub-sector is expected to remain robust, primarily due to the correlated growth in the automobile and capital goods sectors.