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Informist, Tuesday, Mar. 11, 2025

NEW DELHI - The global oversupply of steel that was witnessed in 2024, is likely to continue in 2025 despite marginally lower production in China, India Ratings and Research said at a press conference Tuesday. "Even though we expect a marginal decline in steel production from China, sluggish demand is likely to keep supply high," Rajat Mehta, senior analyst at India Ratings said. 

China is both the world's largest producer and consumer of steel. However, with muted demand growth in China because of a weak real estate sector and tepid growth in end user industry, there has been a global glut of the commodity. Mehta said modest recovery in the European Union consumption story is likely to add to the abundance of steel supply in the world.

Talking about the 25% tariffs announced by the US on steel imports, due to take effect from Mar. 12, Mehta said the trade barriers could further add to the global oversupply situation. This would divert flows from other geographies, realigning global supply-chains and may temporarily affect prices. "However, the exact impact on steel prices and the global trade dynamics remains to be seen," he said. 

India, according to Mehta, is likely to see higher inbound shipments of steel not just from China but from other countries such as Vietnam, South Korea, and Japan as the India growth story unfolds. "Indian production as well as the consumption has all seen a growth with rising end-user sector demand. This has led to imports rising, mainly in form of hot-rolled coiled and electrical steel pipes and galvanized steel imports," he said. 

Meanwhile, India's own production of steel is also seen rising to cater to its growing demand. "The production of steel in India has been consistently increasing on a quarter-over-quarter basis, driven by robust demand from end-user segments such as infrastructure, automotive, and engineering, procurement, and construction," he said.

India Ratings projects this "strong consumption story" to continue, with infrastructure growth projected at 10-12% and automotive growth at 5-8% in 2025-2026 (Apr-Mar). "To meet this growing demand, many steel players are expanding their capacity, and capacity utilisation levels have been sustained at around 80%. We expect this trend to continue, supporting the overall growth of India's steel industry," Mehta said.  End

Reported by Pallavi Singhal

Edited by Vandana Hingorani

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