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ICRA Raises Growth Forecast for Indian Steel Industry to 9-10% in FY2024

ICRA, the rating agency, has raised its growth projection for the domestic steel industry to 9-10% for this fiscal year, citing robust government capital expenditure as the driving force. Initially, at the beginning of the 2023-24 fiscal year, ICRA had estimated the steel industry’s growth to be in the range of 7-8%.

According to the statement from ICRA, “ICRA has revised its FY2024 forecast for domestic steel demand growth to 9-10%, up from the initial projection of 7-8%, thanks to strong government capital expenditure.”

With the government’s focus on infrastructure-driven growth, the domestic steel demand has been consistently growing in double digits since FY22, and this trend has persisted in the current fiscal year. Steel demand saw a remarkable 13.1% growth between April and August in this fiscal.

Jayanta Roy, Senior Vice-President and group Head of Corporate Sector Ratings at ICRA, noted, “Approximately 14.3 million tonnes per annum (MTPA) of new steelmaking capacity is expected to be added in the current fiscal year. This represents the largest capacity increase in a single year in recent history. The industry’s supply pipeline remains strong for FY2025 as well, with an estimated 12.3 MTPA of capacities slated for commissioning.”

While the domestic operating environment remains favourable, ICRA pointed out that the industry faces several challenges in the global context. These challenges include the downturn in the Chinese housing market, a significant driver of steel demand in China, and the potential for sluggish economic growth in Western economies.

As a result, while export opportunities for domestic mills are limited, steel imports have been on the rise as global steel trade shifts toward high-growth markets like India during this fiscal year.

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