India’s metal and mining industry is emerging as a rare bright spot in a global commodity market weighed down by stagnating volumes. A recent report by Jefferies highlights India’s robust performance, driven by surging steel production, rising demand, and cost-efficient operations.
India Metal & Mining Industry Outpaces Global Trends in Steel Production
India’s steel production surged by 22% between 2019 and 2023, a stark contrast to the 1% global decline in the same period, according to Jefferies. This impressive growth is underpinned by increased infrastructure spending and rising consumption in the construction and manufacturing sectors.
“Indian metal & mining firms offer a bright spot in the world largely devoid of volume growth in commodities,” the report stated.
The growth trajectory has bolstered earnings for Indian steel producers, with Jefferies projecting further gains over FY25–27, fueled by rising volumes and improving conversion spreads.
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Aluminium and Coal Demand Fuel the Sector’s Resilience
Indian aluminium producers are also benefiting from rising global aluminium and alumina prices. Strong cost-control measures in domestic operations have enhanced competitiveness, while improving supply-demand dynamics are expected to drive further price recovery.
Meanwhile, coal volumes rose 1% year-on-year in the first nine months of FY25, reflecting India’s surging power demand. Jefferies forecasts coal demand to grow at a healthy 5% compound annual growth rate (CAGR) through FY27, with increased power generation and industrial activity as key drivers.
Global Recovery May Boost Prices
Although global markets are sluggish, a recovery in the US and China is on the horizon. Jefferies’ metals team predicts that accommodative policies in China and a favorable economic environment in the US could spark a gradual uptick in commodity demand by 2025.
In China, fiscal and monetary support measures are likely to stimulate demand in infrastructure and manufacturing sectors, while in the US, a combination of lower corporate taxes, reduced regulatory burdens, and increased fixed asset investments are expected to drive growth in metal-intensive projects.
“Conversion spreads in steel and aluminium are below long-term averages, and should expand if demand-supply balances improve,” the report noted.
Infrastructure Push to Drive Indian Demand
India’s domestic steel demand rose 14% year-on-year between April and November 2024, spurred by government-led infrastructure and development projects. Analysts expect this momentum to continue into 2025 as investments in highways, railways, and urban infrastructure expand.
“India is in a unique position where both domestic consumption and export opportunities align to sustain growth in the metal and mining sector,” said a sector analyst.
Challenges and Opportunities for the India Metal & Mining Industry
Despite its resilience, India’s metal and mining industry faces headwinds from global geopolitical and macroeconomic uncertainties. Nevertheless, constrained global supply chains and robust domestic demand are expected to support commodity prices in 2025.
The Jefferies report paints an optimistic picture, underscoring India’s potential to act as a counterbalance in an otherwise stagnant global market. With earnings poised to grow and demand set to expand, the sector remains a beacon of stability in turbulent times.
