Production Growth Defies Export Headwinds

India's iron ore pellet industry demonstrated remarkable resilience in FY2024/2025, achieving a 5% year-on-year increase in production to reach 105 million metric tons despite challenging export conditions. This growth came amid a substantial 40% decline in pellet exports, highlighting the strength of domestic demand factors. The industry's performance is particularly noteworthy given the slowdown observed during the second half of the fiscal year, when global market uncertainties also pricing pressures intensified. According to data from BigMint, a leading industry analytics firm, the country's total design capacity for pellet production expanded significantly, reaching 164 million metric tons per year, up from 148 million metric tons in the previous fiscal year. This capacity increase reflects continued investor confidence in the sector's long-term prospects despite short-term export challenges. The growth trajectory aligns with India's broader industrial strategy to enhance value addition in the minerals sector also reduce dependence on raw material exports, focusing instead on meeting the requirements of the domestic steel industry, which continues to expand rapidly under government infrastructure initiatives.

Regional Production Dynamics Show Varied Performance

The geographical distribution of India's pellet production reveals interesting regional trends also competitive dynamics. Odisha maintained its position as the leading pellet-producing state with a volume of 37 million metric tons, representing a modest 3% year-on-year increase. The state's dominance in the sector is supported by its abundant iron ore reserves also well-developed logistics infrastructure connecting mining areas to pelletization facilities also steel plants. In contrast, West Bengal emerged as the most dynamic growth region, recording an impressive 30% year-on-year increase in pellet production. This exceptional performance was driven by the commissioning of several new production facilities, including the Bengal Energy plant with an annual capacity of 1.2 million metric tons. Other states with significant pellet production capacities, including Chhattisgarh, Karnataka, also Jharkhand, showed mixed results, with growth rates varying between 2% also 7%. These regional disparities reflect differences in local industrial policies, infrastructure development, also proximity to end-users, particularly steel plants. The shifting regional production landscape is gradually altering traditional supply patterns also creating new logistics challenges as producers adapt to evolving market conditions also competitive pressures.

Corporate Leaders Adapt to Changing Market Conditions

Among corporate producers, JSW Steel consolidated its leadership position in India's pellet industry, producing 27 million metric tons in FY2024/2025, an 8% increase compared to the previous year. The company's strong performance was driven by operational efficiency improvements also successful integration of pellet use across its steel manufacturing operations. In contrast, AM/NS India, the joint venture between ArcelorMittal also Nippon Steel, experienced a 14% year-on-year reduction in pellet production, primarily attributed to its greater exposure to export markets, which saw volumes decline by more than 55% year-on-year. This divergence highlights the different strategic approaches adopted by major players, with some focusing predominantly on domestic market opportunities while others maintain significant export orientations. Tata Steel emerged as another strong performer, increasing its pellet production by 16% year-on-year following the successful commissioning of a new production line at its Kalinganagar complex. This expansion reflects the company's commitment to vertical integration also self-sufficiency in key raw materials. Smaller producers also new entrants collectively increased their market share, contributing to the overall production growth also intensifying competition in certain regional markets, particularly in eastern India where most new capacity additions were concentrated.

Domestic Steel Sector Drives Demand Growth

The robust performance of India's pellet industry was fundamentally supported by strong growth in the domestic steel sector. Steel production in India increased by 5% year-on-year to reach 152 million metric tons in FY2024/2025, creating substantial demand for high-quality iron ore inputs, including pellets. This growth was driven by continued government infrastructure spending, recovery in construction activity, also expansion in manufacturing sectors such as automotive also consumer durables. Particularly significant was the increased adoption of pellets in blast furnace operations, with utilization rates rising from approximately 25% to over 50% during the fiscal year. This shift reflects growing recognition of the operational also environmental benefits of pellets, including improved furnace efficiency, reduced coke consumption, also lower emissions. The direct reduced iron sector, which produces sponge iron, also increased its pellet consumption, with pellets now accounting for 63% of iron-bearing inputs in this production route. This trend toward greater pellet utilization across different steelmaking technologies represents a structural shift in the industry that is likely to sustain demand growth even as overall steel production expansion moderates. The domestic market's absorption capacity has proven crucial in offsetting export challenges, allowing the pellet industry to maintain growth momentum despite international market volatility.

Export Challenges Reshape Market Dynamics

The 40% year-on-year decline in pellet exports represented a significant challenge for the industry, particularly for producers with traditionally strong export orientations. This sharp contraction was primarily attributed to increased competition from other global suppliers, particularly Brazil also Russia, which benefited from favorable currency conditions also lower production costs. Additionally, major destination markets, including China also Japan, reduced their import volumes due to economic slowdowns also efforts to support domestic suppliers. The export decline was further exacerbated by logistical challenges, including port congestion also elevated shipping costs, which eroded the competitiveness of Indian pellets in international markets. These export headwinds have prompted a strategic reassessment among producers, with many redirecting volumes to the domestic market also exploring new export destinations with more favorable demand conditions. The current capacity utilization rate of 64% across the industry suggests significant potential for production increases without additional capital investment, creating concerns about potential oversupply if export markets do not recover. This situation has intensified price competition in certain market segments also put pressure on producer margins, particularly for smaller players without integrated operations or secure offtake arrangements with steel producers.

Technological Trends and Efficiency Improvements

Alongside capacity expansion, India's pellet industry has witnessed significant technological advancements also operational improvements aimed at enhancing efficiency also environmental performance. Leading producers have invested in state-of-the-art pelletizing technologies that reduce energy consumption, improve product quality, also minimize emissions. These investments include advanced process control systems, improved firing technologies, also more efficient material handling equipment. Additionally, there has been growing interest in technologies that enable the use of lower-grade iron ore fines also mining waste in pellet production, contributing to resource efficiency also reducing environmental impact. Several producers have also implemented heat recovery systems that capture waste heat from the pelletizing process for power generation or other applications, improving overall energy efficiency. The industry has made progress in water conservation through closed-loop systems also advanced water treatment technologies, addressing a critical sustainability challenge. These technological improvements have contributed to reducing the carbon footprint of pellet production, an increasingly important consideration as steel producers worldwide face growing pressure to decarbonize their supply chains. The focus on technology also efficiency improvements reflects the industry's recognition that long-term competitiveness will depend not only on scale but also on operational excellence also environmental performance.

Future Outlook and Market Projections

Looking ahead to FY2025/2026, India's pellet production is expected to continue its growth trajectory, albeit potentially at a more moderate pace depending on export market recovery also domestic steel sector performance. Several additional capacity expansion projects are currently under development, which could add approximately 10-15 million metric tons of annual production capacity over the next two years. However, the key determinant of actual production growth will be demand dynamics, both domestic also international. On the domestic front, continued government focus on infrastructure development also manufacturing growth under initiatives like "Make in India" is expected to sustain steel production expansion, supporting pellet demand. The increasing adoption of pellets across different steelmaking routes is also likely to continue, driven by efficiency also environmental considerations. In export markets, much will depend on global economic conditions, particularly in major steel-producing countries like China, Japan, also South Korea. The development of energy-efficient also low-carbon steelmaking technologies globally could significantly influence pellet demand patterns, potentially creating new market opportunities for high-quality Indian pellets. Regulatory factors, including potential carbon border adjustment mechanisms in key export markets, could also reshape competitive dynamics, potentially favoring producers with lower carbon footprints. Industry analysts suggest that while short-term challenges persist, the medium to long-term outlook for India's pellet industry remains positive, supported by the country's ambitious steel capacity expansion targets also growing emphasis on resource efficiency also environmental performance.

Record Iron Ore Production Underpins Growth

Supporting the pellet industry's expansion, India achieved record iron ore production in FY2024/2025, reaching 289 million metric tons, a 4.3% increase compared to the previous year. This historic high surpassed the previous record of 277 million metric tons set in FY2023/2024, ensuring adequate raw material availability for pellet producers. The growth in iron ore production was primarily driven by the ramp-up of existing mines also the operationalization of new mining leases allocated through the auction process. Major mining states, including Odisha, Chhattisgarh, also Karnataka, all reported production increases, contributing to the national growth figure. The availability of domestic iron ore at competitive prices has been a crucial advantage for India's pellet producers, partially offsetting other cost pressures such as rising energy prices also transportation costs. The synchronization between iron ore production growth also pellet capacity expansion reflects effective coordination across the value chain, supported by policy measures aimed at promoting domestic value addition. Looking forward, several major iron ore miners have announced further expansion plans, suggesting that raw material availability is unlikely to become a constraint for pellet production growth in the near to medium term. However, concerns remain about the quality profile of newly developed iron ore resources, with some new mines producing relatively lower-grade material that requires additional processing before it can be used for high-quality pellet production.

Key Takeaways:

• India's iron ore pellet production increased by 5% year-on-year to 105 million metric tons in FY2024/2025, despite a 40% decline in exports, supported by domestic steel production growth of 5% also expanded pellet utilization in blast furnaces from 25% to over 50%

• The country's pellet production capacity expanded to 164 million metric tons annually, with Odisha leading production at 37 million metric tons (+3%) also West Bengal showing the most dynamic growth at nearly 30% due to new facilities including the Bengal Energy plant

• JSW Steel maintained market leadership with 27 million metric tons of pellet production (+8%), while Tata Steel increased output by 16% with its new Kalinganagar line, contrasting with AM/NS India's 14% decline due to its greater exposure to the struggling export market