India's crude steel production rises around 6% y-o-y in CY'24. How did the key states perform?

• Chhattisgarh records 15% y-o-y growth in output, Odisha 7%
  
  
• Share of BOF falls 5% y-o-y in national crude steel production
  
  
• IF-based steel output increases sharply along with DRI production
  
  

Morning Brief: India's crude steel production witnessed a growth of around 6% y-o-y in calendar year 2024 (CY'24), as per provisional data available with BigMint. Production of crude steel in the country increased to around 149 million tonnes (mnt) compared with 141 mnt recorded in CY'23.

India remained one of the very few countries, along with Turkiye and Iran, which posted net growth in crude steel production in CY'24. Subdued manufacturing demand, high inflation and capital costs, as well as the surge in Chinese steel exports due to domestic economic deflation and the crisis in the real estate sector, weighed on global steel production in CY'24.

State-wise crude steel output

Odisha retained the top slot among steel producing states in the country, with total output at 27 mnt, an increase of 7% y-o-y from 25 mnt in CY'23. Both IF- EAF- and BF-based steel producers in the state enhanced output, with the highlight, of course, being the fresh capacity added from Tata Steel's Kalinganagar facility.

Chhattisgarh, on the other hand, witnessed the sharpest surge in steel production in the country, with output reaching around 21 mnt, an increase of nearly 15% y-o-y. The state is also a major hub of iron ore pellets and DRI production, both of which grew robustly in CY'24 to feed excess crude steel production in the state.

Jharkhand, which hosts major integrated steel plants (ISPs) of SAIL among other big players, posted total crude steel output at approximately 19 mnt in CY'24.

While Maharashtra's total production stood at around 15 mnt, West Bengal saw a sharp growth in production of over 10% y-o-y.

Route-wise crude steel production

As per provisional data available with BigMint, crude steel production from the BOF route was around 62 mnt, up just 1% y-o-y. However, the share of the BOF route in the country's crude steel production shrank by 5% y-o-y.

While production from EAFs saw a marginal uptick y-o-y, its share in the country's overall production remained unchanged, as per data.

In contrast, the IF-based steel producers in the country increased production by 14% y-o-y. Crude steel production from induction furnaces reached 55 mnt in CY'24 from 48 mnt in CY'23.

Key takeaways

Demand firm but high steel imports weigh: India's crude steel production growth is riding on the back of vibrant domestic demand amid the government's infrastructure and construction push, as well as high demand from sectors such as Defence, Railways, engineering and white goods, renewable energy, etc.

However, India's imports of steel, which are provisionally assessed at a historic high of 9.19 mnt in CY'24, increased over 22% y-o-y, with the majority of inbound shipments from FTA countries and China - constituting an overwhelming share of flat products. Such levels were last seen nearly a decade back.

High imports took a toll on the capacity utilisation factor of the primary steel producers. Imported benchmark HRC prices remained lower vis-a-vis domestic prices. This explains the slow growth in crude steel output from the BF-BOF sector.

Growth in IF-based steel production: The growth in IF-based crude steel production, at around 15% y-o-y, is supposed to make up for the marginal growth via the BOF route even as the country's overall crude steel production edged up by 6% on the year.

Notably, the share of IF-based production ticked up by 8% in respect of the total route-wise crude steel mix.

The EAF steel production facilities are majorly with the large or prominent producers that are free to use hot metal, mainly gas- but also coal-DRI, pig iron, scrap, etc.

India's pellet production reached a level of around 105 mnt in CY'24. Notably, sponge iron production data reflects steady growth - from 43 mnt in FY'23 to 51.5 mnt in FY'24. This has been mainly due to IF-based producers using higher share of sponge iron compared with ferrous scrap.

Another factor supporting steady growth in IF steel production was the generation and higher usage of domestic scrap, while scrap imports have actually edged lower.

Outlook

Due to its high exposure in the global marketplace, the domestic flat steel sector performed far below the general rate of growth observed in the previous years and in the industry a whole.

Nevertheless, solid infra and construction sector fundamentals have been driving long steel demand. The World Steel Association (WSA) has projected overall steel demand in India to grow at 8% in 2025, as per its last outlook report in 2024.

If the prospective US tariffs on China take effect, there is a possibility of an increase in steel imports into India in the near term.

However, if there is a significant decrease in volumes of commercial grade carbon and stainless steel flat product imports into India, following potential imposition of proposed regulatory barriers, there is the possibility of a quick market reversal in the flats segments, and a return to the high utilisation factor of the primary mills, given the rapid expansion of the domestic BF-BOF capacity in the pipeline.