Steel continues to anchor global infrastructure and industrial growth, maintaining its critical role in development. The sector, however, faces three distinct challenges: shifting demand centers, decarbonization imperatives, and volatile trade flows, each independently redefining competitiveness. Meanwhile, India and Southeast Asia (SEA) are emerging as separate engines of growth, with India specifically poised to nearly double its steel demand by 2035.
The global steel industry: An evolving landscape
Steel’s perennial role as a pillar of urbanization and industrialization faces mounting headwinds from chronic overcapacity, protectionist policies, and the uneven pace of decarbonization.
Global steel demand is projected to rise modestly from approximately 1,750 million metric tons in 2024 to between 1,850 million and 1,900 million metric tons by 2035, with most growth concentrated in India and SEA.1 Meanwhile, China’s apparent finished-steel demand is projected to decrease from between 900 million and 950 million metric tons in 2024 to between 800 million and 850 million metric tons by 2035, driven by a structural slowdown in China’s real estate and construction sectors.2 China’s increasing export surpluses are reshaping global trade patterns.
Trade measures in major steel markets have doubled since 2020, reflecting efforts by some regions, such as Europe, to safeguard domestic industries.
Raw material sourcing is likely to become complex, influenced by shifting demand patterns, regional decarbonization initiatives, evolving technology routes, and persistent supply-side risks. The shift in ore dynamics is reflected in the scrap market, where the competition for high-quality scrap is set to intensify.
How countries navigate the raw material constraints will depend on their decarbonization strategies. Europe is the front-runner with the Emission Trading System and Carbon Border Adjustment Mechanism frameworks. The United States has made significant progress with emission reductions, but the challenge is to sustain it amidst policy uncertainty. China’s approach has a moderate emphasis on subsidies and regulatory controls, as does India’s strategy, which is still in the early stages of decarbonization.
India: Sustained growth amid evolving sustainability imperatives
For steelmakers, India is emerging as a key market with the potential to lead the way in future growth. Backed by resilient domestic demand, large-scale infrastructure investments, and favorable policy tailwinds, India’s trajectory could reshape the steel narrative.
Structural drivers point to an improved demand outlook. India’s steel consumption is expected to grow at a 5 to 6 percent CAGR,3 rising to reach between 240 million and 260 million metric tons by 2035.4 Growth in the sector is expected to be driven by GDP expansion, a $1.4 trillion National Infrastructure Pipeline,5 and rising consumption from the renewable energy and defense sectors.6
As a result, India’s installed crude steel capacity of about 180 million metric tons in fiscal year 2025 is set to grow, reaching between 260 million and 280 million metric tons by 2035.7 Major steel players have announced capacity additions of approximately 70 million metric tons per annum over the next five to ten years, driving much of this growth. Most of these additions are expected to support blast furnace–basic oxygen furnace (BF-BOF) processes, which could increase lock-in risks for carbon-intensive assets.
India’s demand for steel is expected to be driven by the demand for high-grade steel from sectors such as automotive, renewables, and defense, which is accelerating the industry’s structural shift toward downstream and value-added products. Looking ahead, downstream and value-added segments could account for an increasing share of both volume and value in the steel sector, reflecting the industry’s strategic pivot toward higher value capture and end-user orientation. The next decade’s investment cycles will test whether the sector’s financial strengths can match its technological and environmental ambitions.
Meeting emission targets could also play a significant role in shaping the domestic industry. In the near term, steel companies are reducing emissions by optimizing energy efficiency and leveraging process improvements in BF-BOF using measures such as installing control systems to reduce coke rate, optimizing slag chemistry setpoints, and increasing BOF gas capture. However, in the long run, several low-emission technologies, such as hydrogen-based direct reduced iron (DRI); carbon capture, use, and storage; and near-zero-emissions electric arc furnaces (EAFs), are being explored globally—but their readiness and cost structures remain uncertain in the Indian context.
Besides transition options, there is growing policy support to meet the decarbonization goals. India introduced the Carbon Credit Trading Scheme in fiscal year 2025, the National Green Hydrogen Mission, the revised Production-Linked Incentive 1.1 (PLI 1.1) for specialty steel, and end-of-life vehicle rules (with a target of 18 percent recycled content by fiscal year 2036).8 However, scaling is likely to demand deeper capital and more stringent transition mandates.
Capacity additions and decarbonization mandates could become indicators of how India navigates the supply of raw materials. India’s iron ore equation is shifting from surplus to uncertainty. Although production of iron ore increased to about 280 million metric tons in 2024, growing demand could lead to an increased reliance on imports by 2035.9
Global demand for met coal, a critical raw material for BF-BOF steelmaking, is likely to decline by 1 to 2 percent due to falling demand from China, Europe, and the Commonwealth of Independent States.10 However, with the addition of new BF-BOF-based steel capacities, India could lead the demand for seaborne met coal, growing from 72 million metric tons in 2023 to between 120 million and 130 million metric tons in 2035.11
As Indian steelmakers pivot toward lower-carbon production routes, steel scrap is emerging as a critical, yet limited, resource. India consumed approximately 33 million metric tons of scrap in fiscal year 2024, of which 30 percent was imported.12 By 2030, demand is estimated to be 50 million to 60 million metric tons, with a shortfall of 10 million to 15 million metric tons.13
Strategic imperatives for the Indian steel industry
As India advances its industrialization and infrastructure goals, achieving sustainable growth and maintaining global competitiveness could depend on strategic shifts—specifically, focusing on high-growth sectors, accelerating decarbonization efforts, securing raw materials, boosting competitiveness, and collaborating with the government.
To meet the evolving demands and ensure business sustainability, Indian steelmakers may need to assess and optimize their portfolios. Their focus will, most likely, turn to high-growth segments of the domestic economy, such as infrastructure, renewable energy, defense, and electric vehicles, while also maintaining access to stable export markets.
Building on this strategic adaptation, Indian steelmakers may be required to weigh their options toward decarbonization. The pathways for a low-carbon future include developing a road map for integrating low-carbon technologies such as natural gas and H2-DRI while enhancing energy efficiency in existing BF-BOF setups, securing long-term access to scrap, green power, and low-emission raw materials. Various funding options—including PLI schemes, concessional finance, and climate-linked instruments to offset decarbonization capital expenditures—could be explored to chart the path to decarbonization.
Looking ahead, steelmakers could reimagine their supply chains to focus on reducing the reliance on imported met coal by focusing on domestic exploration, among other means, and shifting some of their capacity to EAF. They could also address cost-efficiencies by ensuring access to low-cost power and deploying AI for quality control and predictive maintenance.
Overarching these imperatives is the collaboration with the government to improve logistics, enhance raw material resilience, strengthen quality frameworks, drive decarbonization, and improve India’s competitiveness in high-end export markets.
Sustained value creation and global differentiation require targeted strategic pivots by steelmakers. Such actions can position India as a leading manufacturing hub and economic driver even amidst evolving geopolitical challenges and sustainability requirements.
