- Coal, iron ore production rise by 5-8% m-o-m
- India turns net steel importer as imports surge
- Auto production picks up despite high stockpiles
Morning Brief: India’s macroeconomic indicators reflected an uptrend in industrial activity in May 2025, with crude steel, iron ore, and coal production heading north. However, mixed signals emerged, with the manufacturing PMI hitting a three-month low, though the automotive sector witnessed healthy momentum.
BigMint goes behind the scenes.
Steel mills boost output, consumption picks up
Steel production momentum remained healthy in May. India’s crude steel production climbed up by 4.7% to 13.5 million tonnes (mnt) against 12.9 mnt in April. Meanwhile, finished steel production rose by 5.5% m-o-m to 13.15 mnt from 12.46 mnt. The growth could be attributed to the normalisation of operations at mills following maintenance downtimes in April.
However, pig iron output was down by a minor 1.4% m-o-m to 0.73 mnt.
Additionally, finished steel consumption rose by 8.7% to 13.08 mnt in May from 12.03 mnt in April. Despite this, market participants pointed to sluggish offtake amid buyers’ expectations of price corrections.
Steel exports stagnate, imports soar by 54% m-o-m
India’s steel exports (excluding stainless steel) totalled 0.52 mnt in May, up a modest 2% from April’s 0.51 mnt. The export landscape remained largely stagnant, with key destinations for India, such as the EU and the Middle East, experiencing subdued demand.
Imports, however, jumped by 53.7% to 0.63 mnt in May from 0.41 mnt. This was primarily due to a major steelmaker sourcing a higher volume of slabs from its overseas unit.
India was a net importer in May, with arrivals exceeding outbound shipments.
Iron ore, pellet imports fall 10%, exports rise 35% m-o-m
Iron ore and pellet imports were down by 10.4% m-o-m at 0.43 mnt.
Iron ore imports dropped 36% m-o-m to 0.16 mnt in May, amid fluctuating global prices. Parallelly, domestic iron ore production increased by 8% to 27 mnt. However, this steep fall was partly offset by an almost two-fold surge in pellet imports to 0.27 mnt, amid logistical challenges and supply constraints.
India’s iron ore and pellet exports climbed up by 35% m-o-m to 2.26 mnt from a four-month low of 1.68 mnt in April. The m-o-m uptick was due to pre-monsoon restocking by China, a pick-up in global pricing, and Chinese mills’ preference for mid-to-low grade material.
Coal production, imports see modest gains
Coal production climbed up by 5.3% m-o-m to 86.34 mnt in May. Coal India Limited recorded output of 63.5 mnt, up 2.3% from 62.1 mnt in April. Additionally, the company’s total inventories remained above the 100-mnt mark in May, though they dipped by 1.8% to 105.68 mnt in May.
In May, India’s coal imports increased by a higher 10% m-o-m to 27.16 mnt. Non-coking coal imports rose 10% m-o-m to a one-year peak of 17.44 mnt, driven by attractive pricing and pre-monsoon restocking by sponge iron mills.
In comparison, India’s coking coal imports declined 6% to 4.9 mnt in May. A sustained decline in met coke prices likely pressured demand for coking coal.
Power generation dips on early monsoon onset
Daily average power consumption inched down by 2% m-o-m to 4,800 million units, driven by the early arrival of the monsoon and heavy pre-monsoon showers across India. Subdued industrial activity also led to the slight drop.
Notably, coal-fired power generation fell 4.2% m-o-m to 111 billion units in May.
Auto production rises even as inventories swell
May was a relatively strong month for the automobile sector. While production climbed up by 11.7% m-o-m to 2.58 million units, sales increased by 9.8% to 2.12 million units. Inventories rose to 52-53 days from 50 earlier, compared to an ideal 21 days.
While momentum remained healthy in May, adverse geopolitical sentiment (the India-Pakistan conflict) in northern India and financial difficulties affected purchases.
Electric vehicle (EV) registrations increased by 8.6% to 131,100 units.
Manufacturing PMI falls to 3-month low
India’s manufacturing PMI hit a three-month low of 57.6 points in May, under strain from heightened competition, inflationary pressures, and geopolitical tensions with Pakistan. The rate of growth in new orders and production moderated, and cost inflation scaled to a six-month peak, sharply pushing up selling prices.
Notably, export orders rose at among the highest rates in three years, with Asia, Europe, the Middle East, and the US showing robust demand. Merchandise exports were firm m-o-m at $38.7 billion.
GST collections fell 15.2% m-o-m to INR 2.01 trillion but remained above the INR 2 trillion-mark for the second consecutive month, indicating healthy consumption patterns.
Outlook
India’s steel industry may witness stable momentum in June, with provisional data indicating steady crude steel production and finished consumption m-o-m despite a monsoon-led slowdown in the construction sector, a major contributor to steel demand. On the other hand, latest data shows that India’s manufacturing PMI rose to a 14-month high of 58.4 points in June, on the back of gains in production and new order inflows. As such, a sharp deceleration is unlikely in June.
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