New Delhi [India], in a reversal from its status as a net steel exporter since FY2017, India has become a net importer in FY2024, recording an overall steel trade deficit of 1.1 million tons (MT), according to a CRISIL study. report.
The development highlights a dynamic shift in the country's steel trade landscape, largely influenced by growing domestic demand and rising imports from major steel-producing nations.
India's finished steel imports reached 8.3 MT in FY2024, up a substantial 38 percent year-on-year. The main contributors to this increase in imports were China, South Korea, Japan and Vietnam. Chinese steel imports alone accounted for 2.7 MT, while South Korea and Japan exported 2.6 MT and 1.3 MT of steel to India, respectively.
Notably, imports from Vietnam increased by a staggering 130 percent year-on-year, positioning Vietnam as a major steel exporter to India and reversing its previous status as a major importer of Indian steel.
The influx of imports of steel products has outpaced the growth of India's exports. Despite an 11.5 percent increase in finished steel exports, totaling about 7.5 tonnes in fiscal 2024, the increase was insufficient to offset the growing volume of imports.
The increase in exports came from a low base and was mainly driven by the second half of the fiscal year, particularly the last quarter, where exports increased 37 percent year-on-year.
The European Union (EU), India's largest steel export market, presented a mixed scenario. Exports to the EU increased by 51 percent in fiscal 2024, contributing to 36 percent of India's total steel export basket.
This increase came after a challenging first half of the 2023-24 fiscal year, in which exports had declined, only to recover strongly in the second half.
The fourth quarter saw a notable 37 percent increase in exports to the EU compared to the previous year. Despite this recovery, competitive pressures from Chinese steel in the global market have significantly affected India's export potential.
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 turned to international markets, including India's top export destinations, with competitively priced steel, putting pressure on Indian exports.
Despite challenges on the export front, the Indian steel industry has been buoyed by strong domestic demand. India's steel consumption witnessed a healthy growth of 13.6 per cent in FY2024, reaching 136 tonnes.
This growth reflects the continued expansion of the country's infrastructure and vibrant development in related sectors.
Rising 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.
At the same time, finished steel production in India increased by 12.7 percent year-on-year, reaching 139 tons.
This production growth has been supported by favorable government policies and substantial investments in expanding steel production capacities.
These investments have not only boosted production but also ensured a steady supply of steel to meet growing domestic demand.
The transition from a net exporter to a net importer of steel presents both challenges and opportunities for India.
The need to manage the influx of cheaper imported steel while boosting domestic production and maintaining export competitiveness will require strategic adjustments.
Policymakers and industry stakeholders must navigate these dynamics to sustain growth and strengthen the country's position in the global steel market.
The development highlights a dynamic shift in the country's steel trade landscape, largely influenced by growing domestic demand and rising imports from major steel-producing nations.
India's finished steel imports reached 8.3 MT in FY2024, up a substantial 38 percent year-on-year. The main contributors to this increase in imports were China, South Korea, Japan and Vietnam. Chinese steel imports alone accounted for 2.7 MT, while South Korea and Japan exported 2.6 MT and 1.3 MT of steel to India, respectively.
Notably, imports from Vietnam increased by a staggering 130 percent year-on-year, positioning Vietnam as a major steel exporter to India and reversing its previous status as a major importer of Indian steel.
The influx of imports of steel products has outpaced the growth of India's exports. Despite an 11.5 percent increase in finished steel exports, totaling about 7.5 tonnes in fiscal 2024, the increase was insufficient to offset the growing volume of imports.
The increase in exports came from a low base and was mainly driven by the second half of the fiscal year, particularly the last quarter, where exports increased 37 percent year-on-year.
The European Union (EU), India's largest steel export market, presented a mixed scenario. Exports to the EU increased by 51 percent in fiscal 2024, contributing to 36 percent of India's total steel export basket.
This increase came after a challenging first half of the 2023-24 fiscal year, in which exports had declined, only to recover strongly in the second half.
The fourth quarter saw a notable 37 percent increase in exports to the EU compared to the previous year. Despite this recovery, competitive pressures from Chinese steel in the global market have significantly affected India's export potential.
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 turned to international markets, including India's top export destinations, with competitively priced steel, putting pressure on Indian exports.
Despite challenges on the export front, the Indian steel industry has been buoyed by strong domestic demand. India's steel consumption witnessed a healthy growth of 13.6 per cent in FY2024, reaching 136 tonnes.
This growth reflects the continued expansion of the country's infrastructure and vibrant development in related sectors.
Rising 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.
At the same time, finished steel production in India increased by 12.7 percent year-on-year, reaching 139 tons.
This production growth has been supported by favorable government policies and substantial investments in expanding steel production capacities.
These investments have not only boosted production but also ensured a steady supply of steel to meet growing domestic demand.
The transition from a net exporter to a net importer of steel presents both challenges and opportunities for India.
The need to manage the influx of cheaper imported steel while boosting domestic production and maintaining export competitiveness will require strategic adjustments.
Policymakers and industry stakeholders must navigate these dynamics to sustain growth and strengthen the country's position in the global steel market.
