Sponge iron production in India increased by 8 percent

NEW DELHI New Delhi: Production of direct reduced iron (DRI), also known as sponge iron, in India recorded a compound annual growth rate (CAGR) of 8 per cent, growing from 34.7 MT in FY19 to 51.5 metric tonnes (MT) in FY2024, outpacing the 5 per cent growth in crude steel output, a report said on Monday.India is the world’s largest DRI producer, with production set to grow to over 75 MT by FY2030 from 51.5 MT in FY2024, according to a Crisil report.

Small and medium-sized players accounted for 71 per cent of domestic DRI production in FY2024, while the rest was accounted for by large players.The demand for DRI comes from long steel manufacturing. The share of long steel production increased from 51.5 per cent in FY19 to 54.8 per cent in FY24 due to construction and infrastructure activities.

This trend is likely to reverse over the next three years, as the share of flat steel production is expected to increase with large players adding their capacities through the blast furnace-blast oxygen furnace (BF-BOF) route,” the report said. However, in absolute terms, the production of long steel is likely to be higher than that of flat steel. Domestic DRI production depends primarily on raw materials such as iron ore fines/pellets, coal and natural gas. India produces about 80 per cent of sponge iron through the coal-based route and the rest through the gas-based route.

The country is self-sufficient in terms of iron ore and imports 30-40 per cent of its coal requirement from countries such as South Africa and Indonesia. Iron ore production, at 277 MT in FY24, is expected to register a CAGR of 7-9 per cent over the next five years. Further, the report highlights that pellet production is likely to increase due to capacity addition and demand from the raw steel sector. Thermal coal supply has increased from FY24 and is expected to increase further with additional supplies from Coal India Limited.