India's production of direct reduced iron (DRI), commonly known as sponge iron, grew at a compound annual growth rate (CAGR) of 8% to reach 51.5 metric tonnes (MT) in FY 2024, up from 34.7 MT in FY 2019, outpacing the 5% growth in crude steel output, according to a report.
India, the world's largest DRI producer, is expected to see production exceed 75 MT by FY 2030. In FY 2024, small and mid-sized companies contributed 71% of the country's DRI output, while large companies accounted for the remaining 29%.
Demand for DRI is driven by long steel manufacturing, with long steel production rising from 51.5% of total steel production in FY 2019 to 54.8% in FY 2024 due to construction and infrastructure activities. However, the trend is expected to reverse over the next three years as flat steel production is anticipated to increase, with large players enhancing capacity through the blast furnace-blast oxygen furnace (BF-BOF) route. Despite this shift, the absolute production of long steel is expected to remain higher than that of flat steel.
India primarily produces sponge iron using the coal-based route (80%), with the remaining produced through the gas-based route. The country is self-sufficient in iron ore but imports 30-40% of its coal from countries like South Africa and Indonesia. Iron ore production stood at 277 MT in FY 2024 and is projected to grow at a CAGR of 7-9% over the next five years. Additionally, pellet production is expected to increase due to higher capacity and demand from the crude steel sector. Thermal coal supply has also been on the rise since FY 2024, with further growth expected from Coal India Ltd. (ET)
