India's iron ore pellet production increased to 63.7 million mt in January-June 2026, up 16 percent year on year from 54.7 million mt in the corresponding period last year, according to provisional data maintained by BigMint. The increase, led by Odisha and Maharashtra, was supported by stronger fundamentals across the domestic ferrous value chain. India's iron ore production climbed 17 percent year on year to 184 million mt in the first half of 2026, while crude steel output reached 8 percent to 87 million mt in first half of 2026, ensuring adequate raw material availability and supporting higher pellet consumption across both blast furnace (BF) and direct reduced iron (DRI) routes.
Despite the healthy production growth, the industry's expansion remained concentrated in a few states and producers. At the same time, subdued export demand continued to limit capacity utilization, keeping pressure on standalone pellet manufacturers.
State-wise production
Odisha retained its position as India's largest pellet-producing state, with output rising 16 percent to 21.5 million mt in first half from 18.5 million mt in the corresponding period last year. The increase was supported by higher production at AM/NS and Jindal Steel, as well as higher operating rates across smaller merchant pellet plants.
Karnataka remained the second-largest producer, with output increasing 12 percent to 10.3 million mt from 9.2 million mt. Maharashtra registered the sharpest growth among major producing states, with production rising 56 percent to 7.8 million mt from 5 million mt, driven by capacity ramp-ups, especially at Lloyds Metal.
According to market participants, Lloyds Metal's rapid production expansion has disrupted supply dynamics at major markets due to aggressive price competition. For example, Lloyds Metal has been shipping material to other regions such as Kandla, Raipur, and Hyderabad, which has eroded the market share of merchant producers there.
West Bengal increased production by 8 percent to 7.1 million mt from 6.6 million mt, while Chhattisgarh and Jharkhand recorded moderate gains to 5.8 million mt and 5.5 million mt, respectively. Andhra Pradesh also witnessed a sharp improvement, with output up 35 percent to 4.2 million mt compared with 3.1 million mt in first half of 2025.
Overall, pellet production growth remained concentrated in eastern and central India, where iron ore availability and integrated steel capacities continue to support higher output.
Top producers
Integrated steelmakers increased pellet production in the first half of the current year, with steelmaking expansions accelerating. JSW Group remained India's largest pellet producer during the given period, with production increasing 14 percent to 14.8 million mt from 13 million mt in the year-ago period.
AM/NS India emerged as one of the fastest-growing major producers, with output rising 41 percent to 8 million mt from 5.7 million mt, supported by higher operating rates and pellet exports. Tata Steel's pellet production increased marginally to 6.4 million mt from 6 million mt, while Jindal Steel Ltd expanded output by 37 percent to 5.7 million mt from 4.1 million mt.
Domestic demand remains strong; exports soften
Higher hot metal production continued to support domestic pellet consumption during the review period. Blast furnace-based steelmakers consumed around 31 million mt of pellets in the first half, compared with 24 million mt a year earlier, reflecting a 29 percent increase in pellet usage in integrated steelmaking. This reflects increasing preference for pellets to sinter in blast furnace-based steelmaking.
Pellet consumption by the DRI sector also increased 11 percent to 31 million mt from 28 million mt, supported by sustained sponge iron production and the operational advantages of pellet-based DRI over iron ore lumps.
India imported around 1.1 million mt of pellets during the January-June period of 2026, broadly unchanged from 1 million mt a year ago. However, pellet exports declined by 24 percent to 2.2 million mt from 2.9 million mt, as weaker international demand, better domestic realizations, and increased competition from overseas suppliers reduced export opportunities.
Capacity utilization remains challenge
India's pellet capacity has continued to expand over the past few years, supported by investments from both integrated steelmakers and merchant producers. As of financial year 2026, India's pellet capacity stood at 179 million mt against 165 million mt in the previous fiscal year, gaining around 8.5 percent year on year.
The fact that production growth has outpaced the increase in installed capacity indicates that capacity utilization improved in the first half of 2026, at around roughly 71 percent compared to 66 percent in the year-ago period. However, utilization levels remain below optimal due to declining exports and increasing competition within the domestic market.
The widening gap between installed capacity and actual production continues to weigh on operating margins, particularly for standalone pellet manufacturers that rely more heavily on export markets.
Outlook
India's pellet production is expected to remain on a growth trajectory through the remainder of 2026, supported by healthy crude steel output, strong iron ore availability and sustained demand from both BF and DRI segments.
However, export demand is likely to remain subdued amid steady global pellet supply and cautious overseas buying. Going forward, improving capacity utilization and strengthening domestic consumption will be more critical for the industry's profitability than further capacity additions, as producers increasingly focus on operational efficiency and higher-value pellet grades.
Source: BigMint
