India’s finished steel consumption grew at a CAGR of 5.2% during FY16-FY20 to reach 100 MT. India’scrude steel and finished steel production increased to 108.5 MT and 101.03 MT in FY20P, respectively.

Between April 2020 and January 2021, India’s cumulative production of finished steel at 76.04 MT. Forthe period April 2020 and February 2021, India’s cumulative production of crude steel stood at 93.1 MT.

The National Steel Policy, 2017 envisage 300 million tonnes of production capacity by 2030-31. Theper capita consumption of steel has increased from 57.6 kgs to 74.1 kgs during the last five years. Thegovernment has a fixed objective of increasing rural consumption of steel from the current 19.6 kg/percapita to 38 kg/per capita by 2030-31.

The steel industry is one of the major beneficiary in terms of mega projects planned and driven by National Infrastructure Pipeline and the demand in 9 identified infra segments, namely roadways, railways, power, housing and urban affairs, new and renewable energy, water resources, airports, rural infra and shipping.

Domestic demand for steel had picked up pace in the second half of FY21 however the second wave of coronavirus has mildly hit demand from certain sectors. It is expected that domestic demand will be lower in the Q1FY22 however in Q2 demand is expected to return with unlocking of restrictions. Capacity utilisation rate of user industries will start to improve as more people get vaccinated and return to work in the coming months thereby pushing steel demand. Steel producers are likely to cover up the lost production in the subsequent months and therefore the annual crude steel output forecast is a healthy 9-11% growth for FY22 as per CARE Ratings.