Indian Steel Association sees demand growth

The New Delhi-based Indian Steel Association (ISA) says it expects steel demand in that nation to grow by 7.5 percent year on year during the current financial year, which runs from April 1 of this year to March 31, 2024.

At that pace, India’s steel demand will reach 128.85 million tons during the current 2023-2024 fiscal year compared with 119.86 million tons the previous fiscal year. ISA says it expects demand to grow another 6.3 percent in the 2024-2025 fiscal year, thus reaching nearly 137 million tons in that 12-month period.

India has become a growing destination for ferrous scrap shipped from the United States and other scrap-surplus nations.

According to U.S. Commerce Department data, India brought in 633,000 metric tons of U.S.-generated ferrous scrap in 2021 and nearly tripled that total to about 1.74 million metric tons last year.

Only Turkey and Mexico purchased more outbound U.S. ferrous scrap than India last year. In 2021, India placed behind not only Turkey and Mexico, but also Malaysia, Vietnam, Taiwan, Bangladesh, Canada and South Korea.

Regarding its future prospects as a scrap buyer, ISA says “in an otherwise gloomy global economic environment, India has been a bright spot, defying global trends.” India’s gross domestic product (GDP) grew by 9.1 percent in its 2021-2022 fiscal year and is estimated to have grown by 7 percent in 2022-2023 fiscal year recently completed.

“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 percent or more, with the multiplier being more than one in such scenarios,” ISA writes.

ISA says all the major steel-using subsectors it studies to make its forecast are expected to grow at 6 percent or above in fiscal year 2024 and fiscal year 2025.

“The rising share of investment in GDP, backed by strong capital expenditure outlay by the government and improving private investments, will drive the construction, railways and capital goods sector," the group says.

On the infrastructure side, the government has increased its budgeted capital expenditures in fiscal year 2024 by 33 percent, of which 50 percent has been allocated for road and railway infrastructure," ISA says, adding that this will drive growth in steel demand.

The group predicts other sectors, including automotive and consumer durables, are expected to maintain healthy growth.