Despite a slowdown in exports and increasing Chinese steel output impacting India’s share in the markets, steel makers in the country are optimistic about the domestic demand.

The furnace in a steel factory (Representational)

India’s export of steel in May 2024 was 0.5 Million Tonnes (MT), lowest in the last six months. It was 0.66 MT in April 2024.

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The case with steel exports

Indian exports have been affected by a variety of reasons in the recent past including low production due to scheduled maintenance shutdowns, preference for the domestic market over exports, limited export quotas from the EU, the slowdown in global steel demand and competitive prices from China.

The country’s finished steel consumption jumped 10.5 per cent to 23 MT in April-May 2024, a six-year high, reflecting very strong sentiments with steel makers optimistic about India’s domestic demand.

Due to the extension of EU Safeguard Measure on steel, particularly European hot-rolled coil (HRC), by a further two years to June 30, 2026 and the availability of higher quantities of steel from China for exports, the Indian exports are expected to be under pressure in the coming months as well. However, the strong domestic consumption is likely to offset the losses in the export market, said Anil Kumar Chaudhary, Chair, Minerals and Metals Committee, PHD Chamber of Commerce and Industry.

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India’s steel demand and consumption

“Higher infrastructure spending and accelerated economic growth have made India a very lucrative market for domestic and global steel makers,” he added.

According to research firm SteelMint, domestic finished steel consumption has witnessed a growth of 13 per cent to 136 million tonnes during 2023-24. The major demand for steel consists of the automotive and infrastructure sectors. The total consumption of steel was around 120 million tonnes in the preceding financial year 2022-23.

The government is also optimistic about the growing steel demand in the country. Steel Secretary Nagendra Nath Sinha had last month that demand will grow at about 10 per cent.

Sanjay Gupta, Chairman and Managing Director, APL Apollo Tubes Limited, said the domestic demand for steel in India is significant and growing, driven by robust construction, infrastructure projects, and the automotive sector.

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The governmental push

“With the Indian government’s focus on infrastructure development and the ‘Make in India’ initiative, there is potential for increased domestic steel consumption. The industry can capitalize on these opportunities by investing in capacity expansion, adopting advanced technologies, and enhancing operational efficiencies,” he added.

As per the steel market watchers, the companies are getting margins of up to 15 per cent which signifies the potential of the domestic market.

Gupta says that the steel prices have been under pressure due to a slowdown in global demand but some companies have managed to maintain satisfactory margins through cost-cutting measures and efficiency improvements.

According to a CRISIL report, India became a net importer of steel in fiscal 2024, with an overall steel trade deficit of 1.1 million tonnes (MT).

The government’s thrust on expansion of infrastructure in urban and rural areas and schemes such as PM Gati Shakti and Make in India have contributed to increased demand for steel.

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