- Iron ore output may reach 305-310 mnt in FY’25
- Consumption expected to edge up by 8% y-o-y
- Production projected to rise 10% y-o-y in Odisha to around 174 mnt
- India’s crude steel output expected to rise by over 3% y-o-y
Morning Brief: India’s iron ore production is expected to increase to 305-310 million tonnes (mnt) in FY’25 from around 280 mnt in FY’24, as per BigMint estimates. The projected growth rate of iron ore production is likely to be in the range of 9-11% y-o-y. Higher production of the key steelmaking mineral is essential to sustain India’s fast-paced growth in steel production and demand.
Top producing states
Our calculations show that iron ore production in Odisha, India’s key iron ore-bearing state, may rise to around 174-175 mnt in FY’25 – higher by over 10% compared with 158 mnt in the bygone fiscal. Both PSU as well as private miners in the state are expected to raise production considerably post approvals for expansion in EC limits. Odisha’s share in India’s total production is expected to increase 57% in FY’25.
Likewise, iron ore production in Chhattisgarh is likely to rise by around 7% y-o-y to 48 mnt in FY’25. Karnataka is also expected to record a nearly 11% y-o-y increase with production expected to reach around 41 mnt. Jharkhand’s iron ore output may remain stable at around 22 mnt, while the contribution of other states may be around 20 mnt in FY’25.
Why may iron ore output rise?
- Higher crude steel production: BigMint estimates India’s crude steel output to rise by around 3-4% y-o-y to 148-150 mnt in FY’25, which will necessitate higher iron ore production. Similarly, production of hot metal via the BF route is also projected to increase by over 9% to 95 mnt.
On the other hand, higher production of sponge iron and pellets to sustain rapid growth in IF-EAF steel production will naturally boost domestic iron ore production. Our projections show that sponge iron production is likely to rise by around 8% to 55 mnt in FY’25. While growth in IF steel production in FY’24 was a phenomenal 25%, EAF steelmakers raised production by 12% y-o-y. Data reveal that the country’s iron ore demand is likely to edge up by over 8% y-o-y to 255 mnt in FY’25.
- Output surges post auctions, expanded ECs: Iron ore output has been on the rise after mineral auctions in key states such as Odisha, Karnataka and now Goa. Likewise, miners have received approvals for capacity expansion in states such as Odisha, Maharashtra, Karnataka, etc. Production from some auctioned greenfield blocks, too, have come onstream. Notably, mining has resumed in Goa after over a decade.
- Export prospects: India’s iron ore exports in the form of fines, lump and pellets rose to a 3-year high of nearly 48 mnt in FY’24. Although exports may fall if China implements crude steel production curbs – more than 90% of total exports are to China – the demand for low-grade Indian ore will always sustain in China for blending purposes as a means of cutting costs and safeguarding margins. The trend of low-grade exports from Karnataka is expected to gain further momentum as more auctioned mines come online. Resumption of mining in Goa after a lengthy hiatus, and the state’s newly-introduced dump handling policy, are likely to provide a fillip to exports, too.