India's Excess Steel Imports Creates Challenge of Surplus Inventory

Indian steelmakers face inventory build-up despite increased domestic steel consumption due to a surge in steel imports, creating challenges for the industry. The steel ministry is actively monitoring the situation as inventory levels of 14 million tonnes (mt) at the end of September show only slight improvement from last year. According to data, steel inventory value since the beginning of 2024-25 is estimated at Rs 89,000 crore.

While domestic steel consumption grew by 13.65% to 72.82 mt between April and September, a 41% increase in imports to 4.7 mt coupled with a 35.9% drop in exports to 2.3 mt have exacerbated inventory levels, according to ICRA Limited. This situation is driven by higher Chinese exports and excess monsoon rainfall impacting construction demand.

Sector experts also note that domestic steel output rose by 5.1% to 70.86 mt in April-September, further contributing to the steel surplus in the market. To address this, import levels must be managed and domestic steel demand revitalized, particularly as weather conditions improve.

“Higher imports and lower exports have resulted in net import of about 2.4 mt in the first half of the current fiscal. So, while the consumption rate is high, higher net import led to similar inventory levels,” said Sumit Jhunjhunwala, sector head of corporate ratings at ICRA Limited.