Steel demand to surge 7-9% in FY24 on Govt’s infra boost, export recovery: India Ratings

MUMBAI: India’s steel demand is set for a 7% to 9% surge in the 2024 fiscal year, driven by Government infrastructure spending and robust domestic consumption, India Ratings andResearch(Ind-Ra)said.

The forecast marks a bullish outlook for the sector, buoyed by an expected demand boost from election-drivenGovernmentprojects, and the end-user industries including construction, automobile manufacturing,andengineering.

Additionally, the Government’s removal of a 15% export duty in November 2022 is likely to stimulate export demand, making Indian steel more globally competitive and widening market access for the domestic steel producers, the agency stated.

“The projected steel demand growth for FY24 reflects a positive sentiment in the industry, underpinned by Government infrastructure spending and a rebound in domestic and export demand,” said Rohit Kumar Gupta, Vice President and Head of ResearchatInd-Ra.

However, the agency also warned of potential challenges from global macro trends and stricter environmental policies, and a softening of raw material prices due tobalanceddemand-supplydynamics and China’s policy to maintain low ironoreprices.

Despite anticipated volatility in commodity prices and debt-led capital expenditure in FY24-FY25, Ind-Ra projects a slight uptick in steel players’ margins from the previous year, maintaining a stable rating outlook for its rated entities forFY24.

The sector recorded a strong 12% YoY growth in FY23, outstripping capacity additions and pointing to a favourable demand-supply balance, theagencynoted.