India's iron ore demand to surge over 50% by 2030 on rising steel production

India is poised to emerge as the world's 3rd-largest economy by financial year 2030-31 (FY'31). India, the 2nd-largest steel producing country in the world today, is set to achieve a notable growth by FY'30, backed by strong economic development.

In FY'30, India's steel demand is projected to grow largely fuelled by construction and infrastructure sectors, which will be contributing 60-65% of the total steel demand followed by auto and general engineering. Factors like urbanisation, housing initiatives, and mega infra projects like Bharatmala, and Dedicated Freight Corridors will boost demand.

Considering that India has nearly 80-85% capacity utilisation, its crude steel production is expected to increase from 144 million tonnes (mnt) in FY'24 to 210 mnt by FY'30.

Consequently, India's iron ore production and demand, both will increase, the latter, by over 50%, within this timeline.

A notable shift will be seen in route-wise steel making in India. Although both BF-BOF and EAF-IF capacities will increase by FY'30, the quantum of increase in the former will be more, rising from 43% in FY'24 to 56% by FY'30. Consequently, share of EAF-IF is likely to come down.

Blast furnace production to increase: Since the BF-BOF route will contribute more in India's steel output, requirement for iron ore, coking coal and PCI will remain firm and rise in tandem. Thus, total iron ore consumption in India's steel industry is projected to increase from 235 mnt in FY'24 to 350 mnt by FY'30.

DRI output, pellets usage to rise: Meanwhile, DRI production is expected to increase from 52 mnt in FY'24 to 65 mnt in FY'30. With more secondary units eager to expand via the EAF-IF route, sponge iron production is likely to see an increase. Procuring iron ore lumps as feedstock has also become a challenge as the delivery time is taking longer compared to pellets. Hence, pellet-based production has started increasing as sponge producers have begun to prefer the former to lumps.

The growing significance of pellets in India's iron making industry is evident in the increasing share of pellets in both hot metal production and direct reduced iron (DRI) making. The share of pellets in hot metal production has risen substantially from 31% to 41%, reflecting their growing role in the blast furnace process. Similarly, the share of pellets in DRI making now accounts for 41-61 mnt, indicating a marked shift towards higher-quality and grades of iron ore pellets by the sponge iron sector. This trend highlights the importance of pellets as a key raw material in meeting the evolving demands of India's iron and steel industry, driven by the need for cleaner, more efficient production methods.

Iron ore production to head north: India's iron ore production is expected to grow by over 50% by FY'30 to 425-430 mnt against 280 mnt in the last fiscal year. Odisha, one of the major producing states and which has over 50% share of the total iron ore production in India, is expected to reach the 200-mnt mark by FY'30 against last fiscal's 156 mnt.

Similarly, production volumes of two other major iron ore producing states in India are also expected to increase. Chhattisgarh's is expected to rise to 70-75 mnt (from the current 44-45 mnt) and Karnataka's to 60-65 mnt (against the current 37-38 mnt) by FY'30.