“Steel Makers Optimistic About India’s Domestic Demand Despite Export Slowdown”

Steel Makers in India Optimistic About Domestic Demand Despite Export Slowdown

Despite a slowdown in exports and increasing Chinese steel output impacting India’s share in the markets, steel makers in the country remain optimistic about the domestic demand. In May 2024, India’s export of steel was at its lowest in the last six months, standing at 0.5 Million Tonnes (MT), down from 0.66 MT in April 2024.

Several factors have contributed to the decline in Indian exports, including low production due to scheduled maintenance shutdowns, a preference for the domestic market over exports, limited export quotas from the EU, a slowdown in global steel demand, and competitive prices from China. The extension of the EU Safeguard Measure on steel, particularly European hot-rolled coil (HRC), and the availability of higher quantities of steel from China for exports are expected to further pressure Indian exports in the coming months.

However, despite these challenges, the country’s finished steel consumption saw a significant increase of 10.5 per cent to 23 MT in April-May 2024, reaching a six-year high. This surge in domestic consumption reflects strong sentiments among steel makers regarding India’s domestic demand.

Anil Kumar Chaudhary, Chair of the Minerals and Metals Committee at the PHD Chamber of Commerce and Industry, noted that while Indian exports may face challenges, the robust domestic consumption is likely to offset any losses in the export market. He highlighted that higher infrastructure spending and accelerated economic growth have made India an attractive market for both domestic and global steel makers.

Research firm SteelMint reported a 13 per cent growth in domestic finished steel consumption to 136 million tonnes during 2023-24, with major demand coming from the automotive and infrastructure sectors. The government is also optimistic about the growing steel demand in the country, with Steel Secretary Nagendra Nath Sinha projecting a 10 per cent growth in demand.

Sanjay Gupta, Chairman and Managing Director of APL Apollo Tubes Limited, emphasized the significant and growing domestic demand for steel in India, driven by construction, infrastructure projects, and the automotive sector. He highlighted the potential for increased domestic steel consumption with the government’s focus on infrastructure development and the ‘Make in India’ initiative.

Despite a slowdown in global demand impacting steel prices, 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 emphasis on expanding infrastructure in urban and rural areas, along with initiatives like PM Gati Shakti and Make in India, has contributed to the increased demand for steel in the country. Steel market watchers note that companies are achieving margins of up to 15 per cent, underscoring the potential of the domestic market.

In conclusion, while challenges persist in the export market, the strong domestic demand for steel in India presents significant opportunities for growth and investment in the sector. Steel makers are optimistic about the future, buoyed by the country’s robust consumption trends and government initiatives supporting the industry’s expansion.