Steel industry sees strong domestic demand, but significant export challenges: Report
1 min read 12 Jun 2023, 04:15 PM ISTThe growth can be attributed to the healthy demand from key sectors such as infrastructure, real estate, and automobile industries.
PremiumNew Delhi: The steel industry is witnessing robust domestic demand but facing significant challenges in terms of exports, according to a comprehensive report released by CareEdge Advisory & Research on Monday.
The report highlights that domestic finished steel consumption recorded impressive growth of 13.3% year-on-year (y-o-y) during fiscal year 2023. This growth can be attributed to the healthy demand from key sectors such as infrastructure, real estate, and automobile industries.
However, the report reveals a sharp decline of 50.2% y-o-y in steel exports. This decline stems from multiple factors, including the imposition of export duties on steel products between May and November 2022. Additionally, weak global demand resulting from ongoing geopolitical tensions and inflationary trends has further contributed to the export challenges faced by the industry.
In response to the buoyant domestic demand and the need to capitalize on export opportunities, the Indian steel industry is aiming to double its steel capacity and production by fiscal year 2031. The report emphasizes that ensuring a sustainable supply of crucial raw materials, such as iron ore and coking coal, along with enhancing export competitiveness, will be vital for achieving this ambitious goal.
Moreover, the steel industry is increasingly focusing on Environmental, Social, and Governance (ESG) aspects. The report predicts significant investments in initiatives aimed at reducing carbon emissions and developing cleaner production technologies in the foreseeable future.
Commenting on the findings, Tanvi Shah, Director at CareEdge Advisory & Research, said, “The domestic steel consumption is expected to grow at 8-10% in fiscal year 2024, primarily driven by infrastructure developments in the pre-election year. The anticipated surge in demand from China has been slower than expected, which may impact steel prices in the near term. As Indian players gear up to meet future demand, accelerating domestic iron ore production and identifying sustainable and cost-effective sources of import-dependent coking coal will be crucial."
Shah also highlighted the challenges associated with transitioning to cleaner technologies, such as green steel, which require substantial capital investment. The adoption of these technologies will depend on the support provided by the government and industry participants.
The CareEdge report provides valuable insights for stakeholders in the steel industry, enabling them to make informed decisions in a rapidly evolving market.