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The Indian Steel Industry Projects Domestic Demand To Rise 7.5% In Current Fiscal


Published Date: June 05, 2023
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The Indian Steel Association (ISA) predicted that India's steel demand would increase by 8 to 9 million tons (mt) annually over the course of the next two fiscal years thanks to strong momentum in infrastructure spending and persistent growth in urban consumption. 

Rise In Demand For Steel 

According to the ISA, the country's demand for steel will increase 7.5% this fiscal year to 128.85 mt. 

According to the steel industry body, with strong momentum in infrastructure spending and consistent growth in urban consumption, steel demand in India is expected to increase by 8–9 mt annually in the next two fiscal years, with growth of 7.5% in 2023–2024 and 6.3% in 2024–25 to reach 136.97 mt. 

In FY23, the demand for steel increased by about 13.3% to reach 119.86 mt, driven by increased domestic demand and production. The ISA forecast takes into account the various sectors that use steel and is demand-driven. The association anticipates growth of at least 6% in all steel-using subsectors in both FY24 and FY25. 

Reasons For Strong Demand 

Steel demand is strongly correlated with GDP growth. The ISA mentioned, “In an otherwise gloomy global economic environment, India has been a bright spot, defying global trends. India’s GDP grew by 9.1% in 2021-22, is estimated to grow by 7% in 2022-23 and is forecasted to grow by 6.4% in 2023-24.” 

Inflation, which was still a problem for many major advanced economies, had been successfully contained in India, according to the association. It also added, “The steel sector has received benefits 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.”

More Reasons As Per The ISA 

"The rising share of investment in GDP, supported by strong government capital expenditure outlay and improving private investments, will drive the construction, railways, and capital goods sectors," the ISA predicted. The association drew attention to the fact that the government increased its budgeted capital expenditures for FY24 by 33% to Rs 10 trillion, of which 50% was set aside for road and rail infrastructure. It stated that "this will fuel growth in steel demand." 

The real estate sector is also anticipated to see "robust" project completion. According to the ISA, the capital goods sector is anticipated to gain from investments in infrastructure, renewable energy, mining, and the steel industry itself (thanks to the PLI Scheme). 

Automotive and consumer durables, two industries that rely heavily on steel consumption, were anticipated to continue growing at a "healthy" rate. Urban consumption will largely support private consumption, while rural consumption is anticipated to experience a steady recovery, according to ISA. 

According to ISA, the intermediate goods sector, which is reliant on exports and the expansion of the automotive industry, was more mixed-bag, with weak global demand limiting the sector's overall export potential. However, it added, "growth will continue to be healthy in this sub-sector primarily due to the related growth in the automobile and capital goods sector." 

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