Steel Surge: How India's Infrastructure Boom is Set to Propel Steel Demand by FY34

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Steel Surge: How India's Infrastructure Boom is Set to Propel Steel Demand by FY34

Ferrous 11 Jul 2024 01:07 PM IST PTI

India's steel industry is poised for a significant upswing, with projections indicating that steel demand could soar to between 221 and 275 million tonnes by FY 34. This anticipated growth, outlined in a recent report by Deloitte, reflects a Compound Annual Growth Rate (CAGR) of 5% to 7.3% over the next decade. The report, unveiled at the ISA Steel InfraBuild Summit, attributes this surge to the Indian government's robust infrastructure investments and the burgeoning industrial activities across various states.

Government Infrastructure Push

The government's unwavering commitment to infrastructure development is central to this optimistic forecast. The PM Gati Shakti National Master Plan, a comprehensive infrastructure blueprint, outlines the creation of 11 industrial corridors encompassing 32 projects to be executed in four phases. These initiatives are expected to be major catalysts for steel consumption, driving the initial growth phase in the coming decade.

From FY14 to FY24, India's finished steel consumption has consistently grown, boasting a CAGR of 5.67%. In FY24 alone, domestic finished steel consumption reached 136 million tonnes, marking a more than 14% year-on-year increase. This growth has been primarily fueled by sustained momentum in developmental projects and heightened government expenditure across various sectors.

Leading States in Steel Consumption

The report identifies Maharashtra, Uttar Pradesh, Gujarat, Karnataka, and Tamil Nadu as frontrunners in steel consumption, collectively accounting for 41% of the total consumption in FY23. These states have established themselves as industrial powerhouses, driving significant demand for steel due to their extensive infrastructure and industrial projects.

Telangana has emerged as a notable player in India's steel consumption landscape. The state's steel consumption in FY23 saw a remarkable 15.75% year-on-year increase, rising from 4.730 million tonnes in FY22 to 5.475 million tonnes in FY23. This growth rate surpasses the national average, underscoring Telangana's robust industrial activity. Telangana is well-positioned as a key driver of future economic growth, with a per capita steel consumption of 156.43 kg, significantly higher than the national average of 93.4 kg.

Sectoral Drivers of Steel Demand

Different sectors contribute uniquely to the rising demand for steel across various states. In Tamil Nadu, the burgeoning electric vehicle (EV) industry is expected to increase the demand for electrical steel significantly. The state’s push towards EV adoption and manufacturing is critical to this demand surge. Additionally, the growth of food processing industries in Tamil Nadu is driving demand for stainless steel, which is essential for the machinery and equipment used in food production.

India's steel industry is on the cusp of a transformative decade, with infrastructure development and industrial growth at the forefront of driving demand. The strategic investments by the government and the dynamic industrial activities across leading states like Maharashtra, Uttar Pradesh, Gujarat, Karnataka, Tamil Nadu, and Telangana are setting the stage for a robust steel demand trajectory. As these developments unfold, the steel industry is poised to become a cornerstone of India's economic growth, supporting the nation’s ambitious infrastructure and industrial expansion plans.

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Steel Surge: How India's Infrastructure Boom is Set to Propel Steel Demand by FY34

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