India's steel consumption expected to grow by 9-10%

India's steel industry is poised for significant growth, with local steel consumption expected to increase by 9-10% in FY2024-25, according to the latest report by credit rating agency ICRA. The first quarter of FY2024-25 saw a significant 15% y-o-y increase in demand, but a slowdown is expected in the current quarter due to the monsoon season.

ICRA expects the steel sector's capacity utilization to reach a ten-year peak of 88% despite the addition of 15.6 million tons per annum of new capacity this year.

India's finished steel imports increased by 35.4% in the first quarter of FY2024-25, continuing the trend observed last year. Despite this surge in imports, steelmakers are benefiting from lower raw material costs. Australian coke prices fell by 45%, while NMDC cut iron ore prices by 18%. These cost reductions are expected to boost profitability, but some temporary margin pressures may occur in the second quarter of FY2024-25.