Steel consumption to rise by 7-8% in FY ’23

Domestic demand of steel is expected to record double digit growth of around 11.3% in FY23 after recording an 11.5% growth in FY22. Going forward, the sector sees strong prospects for expansion, led by overall demand growth across industries and planned investments in infrastructure.


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India is expected to observe a double digit surge of 11.3% in steel demand in FY ’23 after clocking 11.5% growth in FY22 as per latest report released by ICRA.

According to the research, the domestic steel consumption has remained strong throughout FY23, driven by the government’s push for infrastructure-led economic growth. “With the central government’s capex outlay poised to increase by 37% YoY in FY2024, ICRA has revised upwards its steel consumption growth estimate for FY 2024 to 7-8% from 6-7%”, the report stated.

Jayanta Roy, Senior Vice-President and Group Head – Corporate Sector Ratings at ICRA stated, “With steel consumption expected to grow in high-single digits next year, we expect the industry’s capacity utilization rate to improve to around 80% in FY2024, despite the commissioning of some new expansion projects.” Prices of hot rolled coils (HRCs) are also expected to have increased to Rs 60-62,000 per tonne in March, a rise by Rs 1,000-2,000.

India has emerged as the 2nd largest producer of crude steel in the world since 2021. From April-February 2022-23, domestic finished steel production stood at 109.35 million tonne (MT), recording a YoY fall of 3.8%. Finished steel imports to India increased by 20% on a YoY basis in 2022, up to 4.7 million tonnes from 3.94 MT in 2021.

During April-December 2022, India’s steel exports fell by 54% on a YoY basis to 10.33 million tonnes following the imposition of export duties by the Government to curb the rise in steel prices and improve availability of  finished steel as well as raw materials or intermediates. The duties were applied on iron ore lumps with more than 58% Fe content (from 30% to 50% ad valorem); iron ore with Fe content below 58% (50%) and iron ore pellets (45%). Furthermore, export duty of 15% ad valorem was imposed on different forms of alloy and non-alloy steel including pig iron (HS 7201,7208,7209, 7210, 7213, 7214, 7219, 7222, 7227)  and import duty exemptions were given to Anthracite / PCI coal, coking coal, coke & semi coke and ferronickel. Export duties on iron ores lumps & Fines below 58% Fe content,  iron ore pellets and the specified steel products including pig iron were withdrawn in November last year.

Production of Finished Steel (2020-2023)

Year Production Consumption
2020-21 96.20 94.89
2021-22 113.60 105.75
2022-23 (Apr-Feb*) 109.35 107.20

Source:, Figures in Million Tonnes*

Rise of steel consumption in India

The steel sector plays a crucial role in most of the key sectors like automobile, engineering, defence, infrastructure and real estate. In the period from April-November 2022, the domestic consumption of steel was recorded at 75.34 MT, which is 11.9% higher YoY.

The government has undertaken various initiatives of late to boost the growth of steel sector, which is also contributing to increased consumption of the alloy. Some of the contributing factors and government initiatives are listed below:

  • Budget 2023 is majorly focused on infrastructure, real-estate, smart cities etc. An increase in capital expenditure on infrastructure investment by 33% i.e., ₹ 10 lakh crore for 2023-24 is expected to boost the sector.
  • An increased usage of steel is expected as the Budget proposed more commercial, residential and retail development for tier 2 and tier 3 cities.
  • The government undertook a new initiative to developsustainable cities of tomorrow” with an allocation of a whopping ₹ 16,000 crores, which would require the usage of the alloy in bulk.
  • Production of commercial vehicles, the most steel intensive part of automotive demand is back on track after being hit due to the pandemic.
  • Construction is also on full throttle since the return of migrant workers

Furthermore, the government has approved the Production Linked Incentive (PLI) scheme for domestic production of specialty steel with an outlay of ₹ 6,322 crores. This is expected to attract committed investment of ₹ 42,500 crores with a downstream capacity addition of 26 million tonnes.

To provide relief from rising prices of crucial raw materials and intermediates, the government has reduced the Import duty on Anthracite/Pulverized Coal Injection (PCI) coal, Coke and Semi-coke and Ferro-Nickel to zero. The government has also emphasised on the importance of Made in India branding for steel through multiple discussions with major producers (ISPs), DPIIT and QCI.

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