India's domestic steel consumption is projected to rise by 9-10% in FY2025, according to a report by ICRA. The first quarter of FY2025 saw a 15% year-on-year growth in demand, although a slowdown is anticipated in the current quarter due to monsoon impacts. ICRA forecasts that steel sector capacity utilization will reach a decade-high of 88%, despite the addition of 15.6 million tonnes per annum (mtpa) of new capacity this year.

Between FY2021 and FY2024, India’s steel industry expanded rapidly, adding 26.3 mtpa of capacity. An additional 27.5 mtpa is expected between FY2025 and FY2027, driven by growing demand and increased imports. India’s finished steel imports rose by 35.4% in Q1 FY2025, continuing last year’s trend.

Despite rising imports, steelmakers are benefiting from lower raw material costs, with Australian coking coal prices down 45% and NMDC reducing iron ore prices by 18%. These reductions are expected to support profitability, though temporary margin contractions may occur in Q2 FY2025.