What to expect from Indian iron ore industry in FY24?
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- Consumption seen riding crude steel production increase
- Miners ramping up output to meet demand
- Exports expected to rise in step with production
Morning Brief: India's iron ore scenario looks a positive one, riding the growth in crude steel production, in the current financial year 2023-24 (FY24). Correspondingly, consumption, production, exports and also imports are expected to increase, reveals data maintained with SteelMint.
Consumption seen rising 7% y-o-y
India's iron ore consumption is expected to go up by around 7% to 225 million tonnes (mnt) by the end of the current fiscal (FY24), as per SteelMint's estimates.
This consumption will be spearheaded by the growth in India's crude steel production, which is slated to grow about 6% to 134 mnt in FY24 from the current 126 mnt. In this, the share of hot metal will possibly increase 7% to 87 mnt (from the current 81 mnt). Crude steel growth through the DRI route will rise a modest 2 mnt to 46 mnt in the period under review.
Production increase a must to feed demand
If consumption rises, production will also need to keep pace with it. SteelMint estimates that India's iron ore production will increase 7% to 275 mnt in FY24 from 257 mnt seen in FY23.
Most of India's major miners are in the process of ramping up production. An additional 20-26 mnt will accrue from them by next fiscal, SteelMint estimates. Production from Odisha, the state contributing the highest iron ore output, is expected to cross 150 mnt for the first time in the period under review.
Exports to rise significantly
Exports are a function of production. With the growth in iron ore production, exports of the same are also likely to head north. At present, India's iron ore and pellets exports hover at around 21 mnt but are anticipated to rise a significant 64% to nearly 35 mnt by end of this fiscal.
China is the leading importer of India's iron ore and pellets. But SteelMint understands, despite China's production cuts, its imports of Indian iron ore may remain unaffected, driven by two factors. One is price viability. If Indian ore prices drop then China will likely remain steadfast in it procurements from Indian sellers. Two, the bulk of China's iron ore comprises the high-grade variety, procured from Australia and Brazil. Thus, the Indian volumes are minuscule in the 1 bnt imported per annum and will remain unaffected, it is estimated.
Imports needed for blending purposes
India's iron ore imports are rather limited in volume per annum. Last fiscal, these were at a mere 1.4 mnt. However, this fiscal, these may rise 186%, albeit on a low base, to around 4 mnt as consumption grows. Some major mills will continue to import in small parcels to blend with low-grade ore to increase the yield.
Conclusion
The National Steel Policy (NSP),2017 has set a target of increasing the current steel production capacity from 154 mnt to 300 mnt by 2030-31. However, an overwhelming portion of the upcoming capacities is veered towards the blast furnace (BF) route. This will obviously demand huge amounts of iron ore by Indian mills, going forward.
There will also be a greater focus on using pellets instead of sinter, due to environmental reasons, another factor that will fuel higher domestic iron ore demand.
SteelMint's upcoming iron ore & pellets conference to be held in Kolkata in Aug
How will India's iron ore scenario unfold in the short-to-medium term? Will Karnataka's iron ore production cross 45 mnt in FY24? What developments are expected in Goa's mine auctions in the current fiscal? Will Odisha's iron ore production cross 155 mnt in FY24. These and many more topics will be thrashed out at SteelMint's 6th Indian Iron Ore & Pellet Summit, to be held jointly with the 3rd Indian Coal Outlook Conference and the 5th Indian DRI and Steel Conference, at the JW Marriott, in Kolkata, over 24-26 August. This is an ideal platform for furthering your business as more than 500 delegates will network under a single roof. Register now.
