India’s iron ore consumption has dropped to 180-185 million tonnes (mn t) in financial year 2020-21 (FY’21) against the previous fiscal’s (FY’20’s) around 195-200 mn t, as per provisional data maintained with SteelMint. SteelMint had earlier predicted that demand for the key steel-making raw material would likely drop 12% in FY21 from 170-175 mn t.
Reasons for the drop
SteelMint’s revised outlook (where the dip in demand is lesser y-o-y), is based on the fact that India’s crude steel production dropped to 102 mn t in FY21 against 110 mn t in FY’20, a decrease of 7%, which is really nothing to write home about. Demand for iron ore is a function of overall steel demand. That apart, the expected drop in iron ore consumption can be attributed to the fact that most of the mills were not operational in first quarter of FY’21 because of the Covid-induced national lockdown.
As a result of which both primary and secondary mills reported lower production numbers y-o-y basis in FY’21. For instance, in FY’21, production through the BF route was at 58 mn t and EAF/IF route, at 44 mn t. In contrast, production via the BF route in FY’20 was 60 mn t and through EAF/IF, 49 mn t, as per data maintained with SteelMint.
Accordingly, consumption of iron ore also dropped by 10 mn t to around 185 mn t in FY’21 from 195 mn t in FY’20.
India’s iron ore demand in FY’19 was at 170 mn t and in FY’18, at 155 mn t.
Exports rise 86% in FY’21
The country’s iron ore exports in FY’21 were at 46.5 mn t against 25 mn t in FY’20, a hefty 86% y-o-y increase thanks to rising prices of the material, supported by international rates. Grades of Fe 55%-below 58% saw the highest volume of exports at 28.7 mn t (17.9 mn t in FY’20) followed by the grade below Fe55% at 5.6 mn t (2.2 mn t in FY’20) (see chart below).
Production drops in FY’21
Meanwhile, India’s iron ore production in FY’21 was at around 204 mn t against 245.6 mn t in FY’20. The y-o-y drop was on account of a sharp decline in Odisha’s production of the raw material. FY’20 production was also sharply higher than 206.8 mn t in FY’19.
The marked rise in FY’20’s production could be attributed to significantly higher output from Odisha, which alone accounted for 145 mn t in this fiscal due to higher production from those mines in the state that had been earmarked for auctions in early-2020, as their leases were about to expire.
Sustained high production from Nov’19 to Mar’20 from these expiring leases contributed to Odisha’s production touching the 145 mn t peak in FY’20. In contrast, Odisha produced 111 mn t of iron ore in FY21, a decline of 34 mn t against FY’20.
Leading merchant miners’ output in Odisha nosedived in FY21. Serajuddin, Essel Mining and Rungta Mines saw y-o-y decline in production by 76%, 56% and 66% respectively. Collectively, these three miners produced around 35 mn t fewer iron ore in FY21 than in the previous fiscal.
~ By Madhumita Mookerji
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