India Iron and Steel Market Outlook to 2028

India Iron and Steel Market Overview

The India Iron and Steel market is valued at 135.56Mn tons, based on a five-year historical analysis. The increasing demand for infrastructure development and robust manufacturing activity primarily drives this market. Initiatives like 'Make in India' have further pushed the growth of domestic production capacities.

Northern and Western India dominate the iron and steel market, primarily due to their well-established industrial hubs and proximity to critical ports for raw material imports and steel exports. Cities such as Mumbai, Pune, and Delhi are central due to their infrastructural growth and high steel consumption in construction and automotive sectors.

The NSP sets an ambitious target to achieve a crude steel production capacity of300 million tonnes (MT)by2030. As of FY24, India's crude steel production reached143 MT, reflecting a12.6% increasefrom127 MTin FY23, and a substantial rise of around42%since the policy's inception when production was at101 MTin 2017.

India Iron and Steel Market Segmentation

Indias Iron and Steel Market is segmented into the following segments:

By Product Type: The India Iron and Steel market is segmented by product type into flat steel products, long steel products, tubular steel products and others. Flat steel products, including hot-rolled and cold-rolled sheets, dominate the market share. This dominance is attributed to their extensive application in the automotive and construction industries, such as in vehicle bodies, roofing, and industrial equipment.

By End-User Industry: The India Iron and Steel market is further segmented by end-user industries, including building and construction, automotive and transportation, tools and machinery, consumer goods, and others. The building and construction segment holds the dominant market share. This is driven by ongoing infrastructure projects such as highways, urban housing schemes, and industrial corridors, requiring high quantities of structural steel and reinforced bars.

India Iron and Steel Market Competitive Landscape

The India Iron and Steel market is dominated by several major players, showcasing a mix of domestic and international companies. This consolidation highlights their significant influence on production, innovation, and market trends.

India Iron and Steel Industry Analysis

Market Growth Drivers

Infrastructure Development: India's infrastructure sector has been a significant driver of steel demand. Crude steel production grew from 109.137 million tonnes (MT) in 2019-20 to 144.299 MT in 2023-24, registering a growth of 13.4% over the previous year (127.197 MT in 2022-23). This growth can be attributed to strategic policies and industry-led initiatives focused on capacity expansion and the development of high-quality steel products.

Automotive Industry Expansion: India's automotive industry is expanding significantly, contributing to increased steel demand. The production of vehicles requires substantial amounts of steel, and as the automotive sector grows, so does its consumption of steel. The expanding automotive industry directly impacts the steel market positively, as increased vehicle production leads to higher steel consumption.

Renewable Energy Projects: In addition to infrastructure and automotive sectors, government initiatives aimed at housing development have also significantly impacted steel demand. The government set an ambitious target to complete a total of 2.95 crore (29.5 million) houses under the Pradhan Mantri Awas Yojana (PMAY) by 2023-24. This initiative reflects the government's commitment to addressing housing needs across the nation.

Market Challenges

RawMaterial Price Volatility: The Indian steel industry faces challenges due to fluctuations in raw material prices, particularly iron ore and coking coal. Such volatility can impact production costs and profit margins, making it difficult for producers to maintain stable pricing and profitability. This unpredictability poses a significant challenge to the industry's financial health.

Environmental Regulations: Stringent environmental regulations have been implemented to reduce carbon emissions and promote sustainable practices in the steel industry. Compliance with these regulations requires significant investment in cleaner technologies and processes, which can be financially burdensome for steel manufacturers. These regulations aim to mitigate the environmental impact of steel production but also add to operational costs.

India Iron and Steel Market Future Outlook

Over the next five years, the India Iron and Steel market will exhibit substantial growth driven by increasing infrastructure projects, technological advancements in steel production, and rising domestic consumption.

Market Opportunities

Export Potential of Indian Steel: Despite facing challenges such as geopolitical uncertainties and fluctuating demand, India has substantial potential to expand its steel exports. By diversifying its export markets and enhancing product quality through advanced manufacturing techniques like EAFs, Indian steel producers can better tap into global demand.

Electric Arc Furnace (EAF) Technology: The Electric Arc Furnace (EAF) represents a significant advancement in steelmaking, offering advantages over traditional blast furnaces. EAFs utilize recycled scrap steel as their primary feedstock, which not only reduces the need for iron ore but also significantly lowers CO2 emissions compared to conventional methods that rely on fossil fuels like coke. This technology allows for greater flexibility in production, enabling manufacturers to adjust output based on market demand, thus enhancing operational efficiency and sustainability.