India’s steel market has started FY27 on a strong note, but the latest numbers also show something worth watching. Finished steel consumption rose 7.9% to 56 million tonnes during April-July, while production grew at a slower pace of 4.7% to 54.7 million tonnes. Imports have also increased sharply, suggesting that domestic mills are not yet keeping pace with the rise in demand.
Demand is moving faster
The numbers from the first four months are fairly clear:
- Finished steel consumption: 56 MT, up 7.9%
- Finished steel production: 54.7 MT, up 4.7%
- Finished steel imports: 2.77 MT, up 36.6%
- Finished steel exports: 2.29 MT, up 35%
- Import value: ₹28,330.8 crore, up 43.1%
- Export value: ₹18,105.4 crore, up 29.4%
The jump in imports is probably the number that steelmakers will pay the most attention to. India imported 2.77 MT of finished steel during April-July, 36.6% more than a year earlier. China accounted for 30.9% of these imports, followed by South Korea at 30.2% and Japan at 14.9%.
Imports are filling part of the gap
India is still producing more steel than it did last year, but production is not increasing as quickly as consumption. That difference is being partly covered by imports. At the same time, exports have also improved. Finished steel exports rose 35% to 2.29 MT during April-July. So, Indian mills are finding buyers overseas, but imports into the domestic market are rising faster than exports.
This puts domestic steelmakers in a slightly uncomfortable position. Demand is healthy, but they are also having to compete with imported material for that demand.
Alloy steel tells a different story
The numbers become more interesting when we look at individual segments. Alloy steel production increased 26.7% to 3.71 MT, while consumption rose 22.1% to 4.02 MT. Exports of alloy steel also increased sharply, showing that Indian producers are becoming more active in higher-value steel products.
Stainless steel, however, is facing a much wider supply gap. Production fell 4.2% to 1.38 MT, while consumption jumped 25% to 1.77 MT. Imports of stainless steel more than doubled to around 497,000 tonnes, an increase of 111.4%.
July also shows strong demand
The trend did not change much in July. Finished steel consumption increased 6.8% to 14.4 MT, while production rose 3.9% to 14 MT.
This suggests that the stronger demand seen during April-July is not simply the result of one unusually strong month. Infrastructure activity, manufacturing and other steel-consuming sectors are continuing to support consumption.
For steelmakers, however, stronger demand alone is not enough. The important question is whether domestic production can grow quickly enough to capture that demand without giving imports a larger share of the market.
What should steelmakers watch?
India is adding steel capacity, so the production gap could narrow as new capacity becomes available. But until that happens, imports are likely to remain an important part of the domestic market. Steel prices will also matter. If imports remain competitive while domestic raw-material and production costs rise, mills may find it difficult to pass higher costs on to customers.
For now, the market is giving Indian steelmakers a positive signal on demand, but not an entirely comfortable one. Consumption is growing strongly, while production is growing more slowly and imports are moving up sharply. How this balance develops over the next few months will be important for domestic steel prices and mill margins.
Disclaimer: This article is for information and market discussion purposes only. It is based on publicly available information and should not be considered investment or trading advice.