The Indian steel industry faced a challenging 2024, marked by rising imports, reduced exports, and declining prices. As the possibility of a safeguard duty looms, stakeholders are asking whether 2025 will bring relief to the beleaguered sector.
Steel prices hit four-year low
Hot rolled coil (HRC) prices, a key benchmark for flat steel, have reached their lowest levels in four years. Data from BigMint reveals that HRC prices ex-Mumbai stood at ₹46,600 per tonne as of 3rd January 2025, with the lowest recorded price of ₹46,400 on 20th December 2024. The average monthly price for December 2024 was ₹46,900 per tonne, a significant drop from ₹55,000 per tonne in December 2023, marking a 14.7% year-on-year decline.
Despite the ongoing safeguard duty investigation, prices have remained stable due to subdued demand and low market activity during the holiday season. The decline in prices has been driven by weak demand, increased imports, and greater domestic supply availability.
Challenges in 2024: Elections and infrastructure slowdown
The year 2024 saw major disruptions due to elections in India and extended monsoons. With general elections in April-May and eight state elections, government capital expenditure cycles were disrupted. Infrastructure and construction, the largest end-users of steel, faced delays.
Jayant Acharya, Joint Managing Director and CEO of JSW Steel, observed, “Elections disrupted the government capex cycle, but we expect increased spending in the January-March quarter.” He added that the long-term prospects for India remain robust, with rural support and anticipated consumption-boosting measures in the upcoming Union Budget.
External headwinds and geopolitical dynamics
The external environment has added to the industry’s challenges. A new administration in the US may implement additional duties and tariffs, potentially limiting Chinese exports to certain countries. However, India faces the critical task of managing its response to the increasingly protectionist global trade environment. Acharya cautioned, “India must ensure it does not become a dumping ground for imported materials.”
2025: A year of opportunities and reforms
Ranjan Dhar, Director and VP – Sales & Marketing at ArcelorMittal Nippon Steel India, anticipates a stronger 2025. He expects a revival in domestic demand driven by public consumption and investment. Dhar stressed the need for India to focus on reducing import dependency through comprehensive reforms to strengthen its manufacturing capabilities and advance the ‘Atmanirbhar Bharat’ initiative.
The industry’s rising concerns about low-cost imports, particularly from China, have led to calls for government intervention. Steel companies argue that price erosion due to these imports limits reinvestment capacity, threatening long-term growth.
Global and domestic steel dynamics
According to Sehul Bhatt, Director of Research at CRISIL, global steel demand is projected to grow by 0.5-1.5% in 2025, reversing a three-year decline. However, in India, despite high domestic demand, production growth has been modest, with imports capturing incremental demand and keeping prices soft.
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Three key factors are expected to drive steel industry growth in 2025:
- Easing financing conditions.
- A push for localisation by major economies.
- Pent-up demand from key steel-consuming nations.
The role of safeguard duty
India is investigating whether to impose a safeguard duty to curb rising steel imports, which totalled 10.40 million tonnes in 2024, up from 8.53 million tonnes in 2023.
Ritabrata Ghosh, Vice President of ICRA, highlighted potential outcomes: “A safeguard duty could protect the domestic market and allow price increases. Without it, average EBITDA per tonne for top players may remain at $110-130, similar to recent years.”
However, in the absence of a safeguard duty and with profits at current levels, industry leverage is expected to increase if capacity expansion continues.
Conclusion
As India enters 2025, the steel sector’s performance will hinge on government capital expenditure, reforms to reduce import dependency, and the potential implementation of a safeguard duty. While challenges remain, strategic interventions and a supportive domestic environment could help the industry regain its footing.
