The steel sector has been a major contributor to India’s economic development. Its share in the country’s GDP was slightly more than 2% in financial year 2021-22 (FY22).
India’s crude steel production increased appreciably to 120 million tonnes (mnt) and finished steel output to 113 mnt in the last fiscal, driven by rising demand.
Steel is produced mainly through two routes, ie, oxygen and electric. Indian steel plants produced 46% of steel through BF-BOF and 54% through DRI-EAF/IF or scrap-IF/EAF routes in FY22.
Chhattisgarh steel industry scenario: The mineral-rich state of Chhattisgarh is the second-largest steel producer in the country after Odisha. Steel production from the state accounted for 18% of India’s total production in the last fiscal. Total steel producing capacity of the state is nearly 25-26 mnt per annum through both the oxygen and electric routes.
Major industrial locations in the state
- Raipur: Raipur, being rich in minerals, limestone and coal, is one of the key industrial centres in the state. Currently, about 200 large and medium-scale steel mills are operational in Raipur.
- Raigarh: There are about 45 furnaces in Punjipathra, Raigarh with an average yearly production of about 2 mnt of ingots/billets. Mills located at the OP Jindal Industrial Park in Punjipathra receive power through Jindal Power which is the only supplier in the region.
- Bhilai-Durg: It is known for rich mineral deposits, especially iron ore, limestone and quartz. Bhilai Steel Plant, operated by the Steel Authority of India (SAIL), is located in this region.
- Korba/Bilaspur: Korba is known as the power capital of the country as the region has abundant coal and bauxite reserves. The presence of South Eastern Coalfields Limited (SECL) and South Eastern Central Railway (SECR) headquarters in Bilaspur makes material movement easier for the state-based industries.
No. of installed furnaces and plants
- BF-BOF: SAIL, JSPL, JSW and Jayaswal Neco have their own blast furnaces. Their combined steel capacity is 12 mnt per annum (mntpa).
- Sponge iron: There are around 90 sponge iron plants with a capacity of 12 mntpa.
- Pelletisation plants: There are 8 major players in the state having production capacity of around 10 mnt.
- Ferro alloys: Around 30 ferro alloys units are installed in the state with an overall production capacity of 0.9 mntpa.
- Long products rolling capacity: More than 170 steel rolling plants are currently in operation with an overall capacity of approximately 22 mntpa of long products, including rails, rounds, structures, wire rods and rebars.
Raw material sourcing
Iron ore
Iron ore is largely consumed by the secondary steel producers for making sponge iron. These players source raw material from Chhattisgarh, Chandrapur and Odisha mines.
The manufacturers in Raipur and Raigarh also participate in the auctions conducted by Odisha Mining Corporation (OMC), National Mineral Development Corporation
(NMDC) etc for procurement of iron ore lumps and fines. The majority of pellet players in central India rely largely on their captive iron ore mines to meet raw material requirement. However, lumps are being sourced from NMDC, OMC etc.
Iron ore blocks :
Total iron ore capacity of the state is approximately 59 mntpa which is around 17% of the country’s total capacity.
NMDC, located in south Bastar, Dantewada district, and operating at Bailadila complex, has its own mines of high-grade iron ore, known as direct reduced calibrated lump ore (DRCLO) of Fe content 67% +/-1%.
SAIL-Bhilai Steel Plant has captive mines in Dalli and Rajhara in Balod district of the state.
Other major captive miners in the state are Godawari Power and Ispat Pvt Ltd and Jaiswal Neco Industries Pvt Ltd, having combined capacity of approximately 6 mntpa.
Coal:
Indian secondary steel makers consume coal for production of power, sponge iron and for reheating furnaces to make finished products.
The current imported coal requirement of sponge iron manufacturers is about 30-40%. Imported coal mainly comes from South Africa, Indonesia, Russia and Australia etc. Sponge makers also source coal domestically from Coal India Limited (CIL).
The major sponge iron plants are mainly located in a 200-km periphery of mines owned by Coal India subsidiaries like SECL, MEL, NCL etc.
SECL has around 92 coal blocks across central Indian states of Chhattisgarh and Madhya Pradesh. It has around 70 underground and 22 open cast mines.
Steel industries located in the state have contracts with Coal India for supply of the raw material. They can source coal through fuel supply agreements and by participating in the spot e-auctions conducted by SECL through MSTC on a regular basis
Overall steel capacity in Chhattisgarh:
Inter-state material movement
Products exported
- Low grade iron ore lumps/fines, iron ore pellets are usually exported to China.
- Silico manganese, ferro manganese and ferro chrome are exported to Italy, Egypt, Japan, Turkey, the UAE, Brazil, South Korea, China, Mozambique and Indonesia.
- Sponge iron is largely exported to the neighbouring countries — Nepal and Bangladesh — through dry and sea ports or via rail and road.
- Mild steel billets and wire rods are exported to Nepal, Bangladesh, South East Asia and China.
Ever since the Indian government announced export taxes, overseas sales of the above-mentioned products, including raw materials, have been greatly impacted and hardly any bulk deal took place after the duty implementation.
Export figures via marine transport
Iron ore pellets: Around 43 mntpa of iron ore pellets have been exported through Vizag Port in bulk since the last 3 years, as per SteelMint data.
Ferro alloys: More than 85,000 t of ferro alloys (ferro manganese and silico manganese) consignments have been exported in the last two years.
Steel billets/blooms/slabs: SAIL-BSP is the major exporter of steel billets/blooms/slabs from Central India via Vizag Port. More than 11 mntpa have been exported by SAIL-BSP itself in 2021-2022 (till now).
Wire rods: Central India is one of the largest wire rods producing states in India. In the last two years, around 2.5 mnt of wire rods have been exported through Vizag Port.
Metallics mix ratio
Steel-making in Chhattisgarh is purely based on sponge iron due to sufficient availability of iron ore. Sponge iron and melting scrap (including pig iron) usage ratio in steelmaking is 85:15 in the state.
Having a large number of rolling mills in the state, end-cut scrap of rebar, structural steel and pipes can also be recycled and used for steelmaking. Its recovery ratio is approximately 96-97%.
Besides this, heavy melting scrap (HMS) also comes from Odisha and Vizag due to being close to the state. HMS yield recovery is normally between 92-94%, varying from material to material.
Apart from this, steel makers also participate in rail-cutting, plate-cutting and other scrap auctions held by Bhilai Steel Plant, Kalpataru and Indian Railways.
Top induction furnace-route steel producers in Chhattigarh
Trade dynamics:
- The Odisha sponge iron market offers competition to the Raipur DRI market due to its cost-effective pricing and easy accessibility. The main sponge iron supplying markets in Odisha are Jharsuguda, Barbil, Dhenkanal, Jajpur and Rourkela.
- Central India is a trend setter for semi-finished steel prices, especially for the southern and northern regions.
- For finished steel — such as rebars, wire rods and structural — Raipur is a competing market for Maharashtra and West Bengal.
- For raw materials like pellets and silico manganese, Odisha and West Bengal are the major competitors of the Raipur market.
Upcoming capacities
The steel plants located in Chhattisgarh have received environmental clearances and consent to establishment for further expansion of the existing units. More than 100 units have proposed to expand their capacity, as per the capacity expansion data maintained with SteelMint since January 2021.
For more details and to become a data partner with SteelMint, please contact below:
Article writer: B Kameshwar Rao (Analyst) +91 73891 32223 or info@steelmint.com
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