Robust Growth in Domestic Steel Consumption, Rises 13% to 136 Million Tonnes in FY24

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Key Takeaways 

- Domestic finished steel consumption in India grew by 13% to 136 million tonnes in FY24, up from 120 million tonnes in the previous fiscal year. 

- The increase was largely driven by robust demand from the automotive sector, particularly with a focus on electric vehicles, and sustained investments in infrastructure and construction, supported by government projects.

- Production of crude steel also rose significantly by 12.6%, reaching 143 million tonnes, up from 127 million tonnes in FY23, to meet the growing domestic and potential international demand.

- The automotive and infrastructure sectors are key contributors to the surge in steel demand, with the shift towards electric vehicles playing a crucial role.

- The outlook for the Indian steel industry remains positive, with expectations of continued growth driven by sectoral expansions and governmental focus on infrastructure. 

- Further enhancements in production technology and efficiency are anticipated to align with global environmental standards and sustain the upward trend in consumption.

Introduction

The Indian steel industry has demonstrated a commendable performance in the fiscal year 2023-24, with domestic consumption of finished steel reaching 136 million tonnes, marking a significant 13% increase from the previous year. This growth has been largely supported by heightened demand from pivotal sectors such as automotive and infrastructure.

Growth Dynamics

According to a recent report by SteelMint, the country’s finished steel consumption stood at 120 million tonnes in the 2022-23 financial year. The increase in consumption during FY24 is attributed to several factors, with the automotive industry playing a crucial role. Notably, the push towards electric vehicles (EVs) has spurred a wave of renewed interest and investment in the steel sector. Moreover, the resilience of the infrastructure and construction sectors, backed by substantial government-funded projects, has further propelled this demand.

Sectoral Contributions

The automotive sector, which has been at the forefront of adopting new technologies and expanding production capacities, particularly in the realm of electric vehicles, has significantly contributed to the increased steel demand. The infrastructure sector is not far behind, with ongoing and new projects requiring vast amounts of steel, thereby ensuring a steady demand trajectory.

Production Insights

In parallel with the rise in consumption, the production of crude steel in India also saw an impressive increase, growing by 12.6% to reach 143 million tonnes from 127 million tonnes in the previous fiscal year. This uptick in production is essential not only to meet domestic demand but also to strengthen India’s position as a key player in the global steel market.

Implications for the Future

The current trends suggest a robust outlook for the Indian steel industry, with continued growth expected in the coming years. The alignment of the steel sector with governmental infrastructure agendas and the automotive industry's shift towards EVs are likely to keep the demand for steel on an upward trajectory. Furthermore, the increased production capacities and technological advancements in steel manufacturing are poised to enhance efficiency and sustainability, aligning with global environmental standards.

Conclusion

The fiscal year 2023-24 has been a landmark year for India’s steel industry, with significant strides made in both consumption and production. As the country continues to focus on expanding its infrastructure and embracing new automotive technologies, the demand for steel is expected to remain strong, offering numerous opportunities for growth and innovation within the sector. The resilience and strategic expansions observed this year lay a solid foundation for sustained growth, reinforcing the steel industry's vital role in India’s economic development.

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This content is for educational purposes only. Securities quoted are exemplary and not recommendatory.

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