India's pellet production rises marginally in CY'22
December output rises 8% m-o-m Consistent output recorded by the primary steel producers Production increases primarily due to captive producers India’s...
- December output rises 8% m-o-m
- Consistent output recorded by the primary steel producers
- Production increases primarily due to captive producers
India's iron ore pellet production in CY'22 stood at over 78.2 million tonnes (mnt), up marginally from 76.3 mnt recorded in CY'21, SteelMint data reveals. Production increased by around 2.5% y-o-y on the back of higher crude steel production due to increased domestic demand.
The country's crude steel production rose 6% y-o-y to 124.45 mnt in CY'22, while remaining stable m-o-m in December at 10.57 mnt. On the other hand, pellet production increased 8% m-o-m to 7 mn t in December as against 6.5 mnt in November.
Major producers
Steel major, AM/NS India emerged as the leading pellet producer in CY'22 at nearly 14 mnt, followed by JSW Steel at 11.1 mnt and JSPL at 7.7 mnt, respectively.
In December, JSW Steel posted production at 0.9 mnt, while JSPL's and Tata Steel's production stood at around 0.7 and 0.3 mnt, respectively. However, leading producer AM/NS India reported a sharp 36% m-o-m increase in production to around 1.4 mnt.
As per SteelMint estimates, India's pellet capacity has risen to around 120 mnt. 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.
The country recorded production in FY22 in excess of 77 mnt, of which around 11 mnt was exported.
Captive vs. merchant output
The marginal rise in pellet production is primarily due to increased output by the captive producers - mainly the integrated steel producers.
Merchant production was heavily impacted by the 45% duty imposed on pellet exports - from zero previously - towards the end of May 2022. Due to the sheer unviability of exports, pellet shipments in CY'22 dropped 28% to 7.44 mnt from 10.31 mnt in CY21. The share of exports to total production, likewise, fell to 9.5% from 13.5% in CY21. Apart from the decline in exports, merchant pellet capacity utilisation fell post duty imposition.
Outlook
Over the last few years, India's pellet capacity has grown at decent rate. Total capacity is expected to rise from 126 mnt to 130 mnt in the near future. Current capacity is approximately 16% greater than 109 mnt in FY22. As per SteelMint assessment, significant capacity additions by the captive players happen to be the key reason. Karnataka's capacity is expected to increase to 35 mnt from 27.7 mnt currently.
In the future, pellet production is expected to increase in order to reduce the carbon footprint of steelmaking, utilise the country's abundant low-grade iron ore reserves, and improve primary steelmaking operational efficiency.
