- Production rises 3% m-o-m to 7.2 mnt in Jan
- AM/NS, JSW top producers at 1 mnt each
- Jan pellet exports edge up by 12% to nearly 1 mnt
India’s pellet production rose to a 10-month high of 7.2 million tonnes (mnt) in January 2023 – an increase of 3% m-o-m from 7 mnt in December, SteelMint data show. Pellet production had reached 7.4 mnt in March last year, the peak point in 2022, and January output is the highest on record ever since. The country’s pellet output has been on the ascendant since the 45% export tax was withdrawn in November last year.
India’s iron ore pellet production in 2022 stood at 78.2 mnt, up marginally from 76.3 mnt in 2021 on higher crude steel production: the country’s crude steel output increased by 6% y-o-y to 124.45 mnt in 2022.
Top producers
The integrated steel producers remained the leading manufacturers of pellets in January. Data show that AM/NS India and JSW Steel top the chart with production of around 1 mnt each, followed by JSPL and Tata Steel at 700,000 t each – all largely stable m-o-m. Notably, merchant production has been on the rise since December following the removal of the export duty on pellets and stable domestic demand.
The integrated steel plants in the country are the major producers and captive consumers of pellets. Capacity-wise, JSW Steel (including subsidiaries) tops the list followed by AM/NS India at 20 mnt, JSPL at 10 mnt, while Tata Steel has a capacity of around 7 mnt, which is set to increase with the commissioning of the 6 mnt/year pellet plant in Kalinganagar.
Over the last few years, the country’s pellet capacity has grown at a rapid pace. Total capacity is expected to rise from 126 mnt to 130 mnt in the near term. Current capacity is approximately 16% higher than 109 mnt in FY22. Significant capacity additions by the captive players happen to be the key reason for this rapid growth.
Exports
India’s exports of pellets in January increased by 12% m-o-m to 940,000 t from 840,000 t in December. Iron ore and pellet exports picked up post removal of export duty on pellets and low-grade iron ore. The recent recovery in global iron ore prices has also kept export bookings from India supported.
Exports to China stood at 760,000 t, down 2% m-o-m. Low steel margins in China are favouring exports of low-grade iron ore over pellets.
Higher exports have kept the production momentum supported. Due to the export tariff India’s pellet shipments in 2022 dropped 28% to 7.44 mnt from 10.31 mnt in 2021. The share of exports to total production fell to 9.5% from 13.5% in 2021. Apart from the decline in exports, merchant pellet capacity utilisation had fallen post duty imposition. If January production data is an indication, this is on the recovery path.
Outlook
India’s monthly pellet production is expected to remain above the 7 mnt-mark in Q4 of this fiscal and output in the near term is expected to increase in tandem with the growth in crude steel production. Exports, however, may not rise significantly due to firm domestic demand.
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