Analysts say the outlook for the domestic steel sector is favorable, despite the fact that anemic growth in some of the world's largest steel-consuming economies could impact prices, thanks to the government's accelerated infrastructure spending in recent months.

Steel is the most commonly used material in infrastructure. Steel demand increased 13% year on year between April and July, despite the Centre spending nearly a third of its budgeted funds on large-scale infrastructure projects.

According to Crisil Market Intelligence, the government's spending in this period is approximately 6 percentage points higher than the average of 26% spent in these months over the last four years.

Steel demand is expected to grow in the double digits for the third consecutive year in the current fiscal year, according to rating agencies ICRA and Crisil.

This increased demand for steel will not only absorb the additional steel capacity that will be added to the domestic market but will also protect prices from the global market's weak pricing trends.

The government has increased its infrastructure spending by approximately 33% to 10 lakh crore for FY24. It has already spent nearly 3.5 lakh crore as of July.