New Delhi: The domestic stainless-steel demand is expected to grow at a compound annual growth rate (CAGR) of nine percent till 2024-25, according to Crisil Ratings. The domestic demand for stainless steel was at four million tonnes (MT) in fiscal 2021-2022, the rating agency said in a report on Thursday.
"Domestic demand for stainless steel is projected to log a healthy compound annual growth rate of 9 percent in the three fiscals through 2025, double the 4.5 percent pace of the past five fiscals," the Crisil Ratings report said. The demand will be driven by the increasing adoption of stainless steel in railways which is a focus area for government infrastructure spending, and rising application in the automobile and construction sectors.
The demand growth, in turn, will spur capacity additions. However, the credit profiles of players are expected to remain comfortable, given stable profit levels and healthier balance sheets. "Adoption of stainless steel is increasing because of its higher durability and lower maintenance. Demand from railways is expected to more than triple by fiscal 2025 and constitute 20 percent of incremental demand for the metal over fiscal 2023-2025. To be sure, the recent Union Budget has doubled the amount earmarked for manufacturing railway coaches to Rs 47,500 crore for fiscal 2024," said Ankit Hakhu, Director, CRISIL Rating
Demand from other major sectors with the application of stainless steel, including consumer goods (45 percent of demand) and the process industry (25 percent), is also expected to grow at a healthy clip of 7-9 percent over the next 3-5 fiscals given higher consumer spends and recovery in consumption. Strong demand prospects, coupled with the absence of any major supply addition in the last three fiscals, have set the stage for capital expenditure (capex).
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