India's iron ore production rises 10% y-o-y in April-Sept'24. Growth trend to sustain

• Iron ore output reaches around 140 mnt in H1FY'25
  
  
• Production in Odisha increases nearly 15% y-o-y
  
  
• BigMint projects production to reach 305-310 mnt in FY'25
  
  

Morning Brief: Iron ore production in India increased by around 9% y-o-y in April-September 2024 (H1FY'25), as per latest provisional data available with BigMint. Domestic iron ore production reached around 139 million tonnes (mnt) in H1FY'25 compared with 128 mnt in the corresponding period of the previous fiscal.

State-wise production

All the major iron ore producing states in India witnessed stable growth in volumes. However, Odisha, the largest iron ore-bearing state in India, was an exception. The state saw production increasing sharply by 14% y-o-y to over 80 mnt in H1FY'25 against 71 mnt in the year-ago period.

This may be attributed to the fact that both PSU and private miners increased production in the state and are expected to raise output further after approvals of extension in EC limits.

Top producers

India's top PSU iron ore producer, NMDC, witnessed a decrease in production to around 17-18 mnt, down from close to 20 mnt in H1FY'24 due to extraneous disturbances. However, Tata Steel emerged as the top producer in H1FY'25, with output touching around 19.5 mnt, up from 17.6 mnt in the same period of last year.

SAIL and OMC were the other front-ranking producers clocking volumes of around 16 mnt each in the period under review, while JSW Steel's ore production was assessed at around 13 mnt in H1, up 17% y-o-y.

Factors driving iron ore output

• Higher crude steel production: India's production of crude steel increased by around 4% y-o-y in H1FY'25 to around 73 mnt as against 70-odd mnt in the year-ago period. This naturally provided an impetus to the production of iron ore, as ore-based processes (BF and DRI) constitute around 93% of iron production in the country, as per Ministry of Steel data.
  
  
• Uptick in sponge iron, pellet production: According to BigMint data available for the period between April-August 2024, production of pellets in the country stood roughly at around 43 mnt, surging around 18% y-o-y. Likewise, production of direct reduced iron (DRI) climbed around 7% y-o-y in April-August to 22 mnt.
  
  
• Output surges post mineral auctions, expanded ECs: Iron ore output has been on the rise after mineral auctions in key states such as Odisha, Karnataka and Goa. Likewise, miners have received approvals for capacity expansion in states such as Odisha, Maharashtra, Karnataka, etc. Production from some auctioned greenfield blocks, too, have come onstream.
  
  

Outlook

Iron ore production is expected to increase to 305-310 mnt in FY'25 from around 280 mnt in FY'24, as per BigMint estimates. The projected growth rate of production is likely to be in the range of 9-11% y-o-y. Higher production of the key steelmaking mineral is essential to sustain India's fast-paced growth in steel production and demand.

Our calculations show that iron ore production in Odisha, India's key iron ore-bearing state, may rise to around 174-175 mnt in FY'25 - higher by over 10% compared with 158 mnt in the bygone fiscal.

Likewise, production in Chhattisgarh is likely to rise by around 7% y-o-y to 48 mnt in FY'25. Karnataka is also expected to record a nearly 11% y-o-y increase with production expected to reach around 41 mnt. Jharkhand's iron ore output may remain stable at around 22 mnt, while the contribution of other states may be around 20 mnt in FY'25.