India’s pellet capacity rises to 120 mnt on increased preference by steelmakers

• India’s pellet capacity hits 120 mnt
• Odisha holds largest capacity
• JSW, AM/NS India top players
• Pellets usage increases over sinter
• New capacities to come up in coming years

India’s pellet-making capacity has expanded rapidly in recent years. The latest available data with SteelMint reveals that the country’s pellet capacity has crossed 120 million tonnes (mnt).

Further capacities are coming up too, especially from primary mills. Some smaller mills have also filed applications, seeking approval to set up pellet plants.

It may be noted that in 2021 alone, over 70 mnt of new capacity was accorded government approvals in the form of environment clearance (EC) as well as consent to establish (CTE).

Odisha – the state with highest capacity

Among all Indian states, Odisha held the largest pellet capacity with 38.14 mnt followed by Karnataka with 27.7 mnt. Maharashtra made into this list at third position with 13 mnt. Pellet capacities in Jharkhand stood at 10.7 mnt and Chhattisgarh at 9.9 mnt.

States like West Bengal (8.7 mnt), Andhra Pradesh (8 mnt) and Rajasthan (1.5 mnt) also contribute while others add almost 2.47 mnt jointly.

JSW tops with over 36 mnt

JSW Steel’s pellet making capacity increased to 36.25 mnt compared to 27.2 mnt recorded in September 2021, as per data maintained with SteelMint. Following this was AM/NS India with 20 mnt after its 6-mnt per annum plant in Paradip got commissioned. Thereafter, followed JSPL (10 mnt), Tata Steel (9.2 mnt) and Rashmi Group (5.7 mnt).

Other largest producers were Brahmani River Pellets, KIOCL, Godawari Power and Ispat, Shyam Metalics and BMM Ispat.

Increased preference for pellets over sinter

One of the key reasons behind rising pellet capacity is its increased usage by blast-furnace steelmakers in place of sinter. This could be because-

• Ore quality deteriorates over a period of time. Unlike sinter, pellets give mills the flexibility to handle these low-grade ores. Higher grade reserves are only going to get depleted over the longer term, making sintering costly and also less environment friendly.
• Pelletising is a much cleaner process than sintering. The reduced carbon footprint is a key reason. Now that there is a massive push for decarbonisation and green steel, India’s targeted 300 mntpa crude steel capacity by 2030 will have to be supported by pellets and not sinter.
• Pellets offer more benefits over sinter in blast furnaces due to ease of handling and chemistry control. Pellets also reduce coke consumption.
• A minimum volume of pellets is preferred in the blast furnace burden to maintain permeability.
• Pellets also give mills the flexibility to divert the material towards exports if domestic demand does not look good.

India’s pellet output in FY22

India’s iron ore pellet production touched an all-time high at over 77 mnt in the last financial year (FY22), higher by 14% y-o-y. Production rose on the back of higher domestic demand amid the significant rise in crude steel production and new capacities coming onstream.

Outlook

As many larger and smaller mills are looking to invest in setting up pellet plants, we could see some capacity addition in the coming years.

About 60.56 mnt capacity is likely to be added in Odisha in the medium term, followed by 8.72 mnt in Chhattisgarh, 7.19 mnt in West Bengal and 4 mnt in Jharkhand.

Join us in our event, to know more about Indian iron ore & pellet market outlook?

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