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According to a CRISIL analysis, India will be a net importer of steel in fiscal 2024, down from being a net exporter since fiscal 2017. The development reflects a dynamic shift in the country's steel trade landscape, fueled by rising local demand and greater imports from major steel-producing countries.
India's completed steel imports reached 8.3 MT in fiscal 2024, up 38% year over year. China, South Korea, Japan, and Vietnam mainly contributed to this import increase. A total of 2.7 MT of steel was imported from China, while South Korea and Japan sold 2.6 MT and 1.3 MT of steel to India, respectively.
Notably, imports from Vietnam surged by a staggering 130% year over year, positioning Vietnam as a significant steel exporter to India and reversing its previous status as a major importer of Indian steel. The influx of steel product imports has outpaced India's export growth. Despite an 11.5% increase in exports of finished steel, totalling approximately 7.5 MT in fiscal 2024, the surge was insufficient to offset the growing volume of imports.
The export increase came from a low br and was primarily aided by the latter half of the fiscal year, notably the fourth quarter, when exports increased by 37% year on year. The European Union, India's largest export market for steel, provided a mixed picture. In fiscal 2024, exports to the EU climbed by 51%, accounting for 36% of India's total steel exports.
This increase followed a difficult first half of the fiscal year 2023–2024, in which exports decreased before significantly returning in the second half. Exports to the EU increased by a significant 37% in the fourth quarter of the year over the prior year. Despite this rebound, Chinese steel's competitive pressures on the global market have had a substantial impact on India's export prospects.
China's aggressive export strategy has been a key factor negatively impacting India's steel exports. The Chinese steel industry, known for its overcapacity, has increasingly targeted international markets, including India's key export destinations, with competitively priced steel, putting pressure on Indian exports. Despite the challenges on the export front, the Indian steel industry has been buoyed by strong domestic demand. India's steel consumption saw a healthy growth of 13.6% in fiscal 2024, reaching 136 MT. This growth reflects the country's ongoing infrastructure expansion and the vibrant development in related sectors.
The increased domestic demand is a positive indicator for the steel industry, underscoring the robust economic activities and government-led infrastructure projects that are driving steel consumption. Concurrently, finished steel production in India increased by 12.7% year-on-year, reaching 139 MT. This production growth has been supported by favourable government policies and substantial investments in the expansion of steel production capacities.
These investments have not only boosted production but have also ensured a steady supply of steel to meet the rising domestic demand. The transition from a net exporter to a net importer of steel presents challenges and opportunities for India. Strategic adjustments will be required to manage the inflow of cheaper imported steel while bolstering domestic production and maintaining export competitiveness. Policymakers and industry stakeholders must navigate these dynamics to sustain growth and strengthen the country's position in the global steel market.
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