India’s Steel Industry Expands Rapidly Amid Raw Material Shifts and Global Pressures

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India is the world’s second-largest steel producer, accounting for nearly 10% of global crude steel output. India’s steel industry demonstrated a remarkable growth, with crude steel production rising by 5.7% year-on-year to 155 million tonnes (Mnt) in FY 2025.

The country produces steel through multiple routes, each playing a critical role in meeting the growing domestic demand. The blast furnace–basic oxygen furnace (BF–BOF) route contributed 65 Mnt, accounting for 43% of total output. Meanwhile, induction furnace (IF) mills produced 56 Mnt (36%), and the electric arc furnace (EAF) route added 34 Mnt (21%).

Combined, IF and EAF routes now dominate the production mix, making up almost 57% of India’s steel output, highlighting the strong role of secondary steelmaking in bridging demand-supply gaps.

Let’s take a closer look at the Indian steel industry, which is poised for continued growth, alongside the government’s strategic initiatives to strengthen domestic raw material production.

India’s Steel Production, Raw Material Trends, and Green Initiatives: A Comprehensive 2025 Overview

Rising Coking Coal Consumption

As India targets to increase steel production capacity to 300 Mnt per annum by 2030, raw material consumption is rising accordingly. Coking coal remains a critical input for BF–BOF production, yet India continues to rely heavily on imports, sourcing about 95% of its requirement from foreign suppliers. To reduce dependency on traditional sources, the government is exploring partnerships with multiple overseas suppliers while also focusing on developing domestic coal production. These steps aim to ensure consistent supply for steel mills while mitigating global price volatility.

Surge in Iron Ore Production

In FY 2024–25, India’s iron ore production reached a record 289 Mnt, marking a 4.3% year-on-year increase. The focus has shifted from exports to meeting domestic steel demand, reflecting the government’s prioritization of internal growth. Consequently, iron ore exports fell sharply by over 35%, from 47.8 Mnt in FY 2024 to around 30 Mnt in FY 2025. To support steel production targets, India is expanding iron ore beneficiation capacity to upgrade low-grade ore. Current capacity is 136 Mnt, projected to rise to 143 Mnt by FY 2025 and 170 Mnt by FY 2030. Despite strong domestic supply, India imported 2.88 Mnt of iron ore fines and pellets between January and April 2025, a 76% year-on-year increase, reflecting ongoing demand pressures.

Growth in MS Scrap Consumption

India is also making strides in ferrous scrap utilization, an important component of sustainable steelmaking. In FY 2025, scrap consumption grew by over 6% year-on-year to 35 Mnt, up from 33 Mnt previously. In the first half of 2025, consumption surged 15.3% year-on-year, totalling 19.65 Mnt, surpassing growth rates seen in other major steel-producing nations. Domestic scrap generation reached 32.4 Mnt and is expected to climb to 46.7 Mnt by FY 2030. Despite this, imports remain essential, totalling 3.48 Mnt in early 2025, up 7.9% year-on-year, even as alternative feedstocks such as direct-reduced iron (DRI) compete for use.

Positive Outlook and Government Initiatives

India’s steel industry outlook remains strong as production scales up toward 300 Mnt per annum by 2030. The government is actively supporting domestic steel through import duties, safeguard and countervailing duties, and quantity quota restrictions. Additionally, the Vehicle Scrapping Policy (2021) encourages domestic scrap generation. On sustainability, India introduced the Green Steel Taxonomy in December 2024, rating steel based on carbon emissions per tonne. Under the National Green Steel Mission, a ₹5,000 crore initiative promotes clean production, including incentives for renewable energy adoption and green hydrogen-based steelmaking.

As of late October 2025, the Chinese steel industry is focused on production cuts, stricter capacity controls, and an “anti-involution” campaign to combat price wars amid weak domestic demand. Despite these measures, exports and industrial profits are up, leading to concerns about oversupply in global markets.

Continued production cuts: In September 2025, China’s crude steel output was 73.5 million tons, a 4.6% year-on-year drop to its lowest level in nearly two years. During January-September 2025 period, output decreased 2.9% year-on-year to 746.25 million tons. The government has re-committed to reducing production in 2025 and 2026 to stabilize the market and control emissions.

Stricter capacity control: A new capacity swap plan requires mills to eliminate 1.5 tons of old capacity for every ton of new capacity added. The plan bans new capacity in key regions like the Beijing-Tianjin-Hebei area and the Yangtze River Delta.

Focus on high-quality development: A recent work plan for 2025–2026 aims for average annual growth of 4% in value-added output by boosting high-end steel production and stimulating consumption. However, market observers are skeptical this will fully offset weak demand from the struggling property sector.

Iron ore demand softens: Iron ore futures have slipped amid concerns over Chinese steel mill profitability, weak domestic investment, and rising inventories.

Also, During January-September 2025 period, Chinese mining companies reduced iron ore production by 3.8% year-on-year to 761.43 million tons. While the country’s monthly ore production amounted to 84.27 million tons, up 0.6% year-on-year and 3.2% month-on-month in September 2025.

Weak domestic demand: Demand from China’s critical construction sector remains weak, pressured by the ongoing property crisis and delayed projects due to typhoons in September. Future demand from construction is expected to remain sluggish.

Strong exports and global impact: To compensate for weak domestic demand, Chinese steel mills have increased exports. This has led to concerns about market oversupply and is drawing international trade scrutiny.

Anti-dumping probes and Increased tariffs: In October 2025, India launched an anti-dumping investigation into steel imports from China, Indonesia, and Vietnam. Other nations, like the U.S. and the EU, have also pursued measures to combat high volumes of Chinese steel exports.

Shift in trade currency: Mining giant BHP will settle 30% of its iron ore spot deals with Chinese buyers in yuan starting in the fourth quarter of 2025, a significant shift in commodity trading practices.

Long-term outlook:

Ongoing overcapacity: Analysts remain concerned that while new policies are stricter, they may not be enough to manage the industry’s chronic overcapacity. Commissioned capacity will likely run for decades, and older mills may resist closing.
Green transition: The government is pushing for technological upgrades and green transitions, requiring ultra-low emission upgrades for over 80% of production capacity by the end of 2025.
According to the China Iron and Steel Association, steel production in China will decline by 4% year-on-year in 2025. This is in line with Beijing’s policy of reducing the economy’s dependence on heavy industry and addressing the problem of overcapacity.