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India's imports of iron ore will continue to rise, but it is not China: Russell

India's growing steel industry is hailed as a boon for iron ore miner's looking to expand their market as China's production slows down. But the reality may not match the hype.

India's capacity to produce steel is about 200 million tons per year, and the South Asian country has ambitious plans for reaching 300 million tons by 2030.

How would this change the dynamics of the global iron ore seaborne market if these plans were to be realized?

To get a definitive answer, you need to determine how much of India's demand for iron ore can be met from its own mines.

According to preliminary data, India is the world's fourth largest iron ore producer. Its production reached a record of 289 million tonnes in the fiscal period from April 2024 through March 2025.

The amount of steel produced in the last fiscal year was 277 million tonnes. However, this is still far short of what it would take to meet the needs of a steel industry that produces 300 million tons annually.

It takes approximately 1.6 tons of iron ore to produce one ton using the blast-furnace/basic oxygen-furnace process. This is the most popular method used in India and China, the world's largest steel producer.

It is possible for India's iron ore production to reach 460 million tonnes by 2030. If it does, can the infrastructure to transport ore from mines to steel mills be built?

Anil Agarwal, chairman of Vedanta group, told Business Standard in October that India could overtake China and Brazil as the world's second largest iron ore producer after Australia.

Vedanta is the owner of Sesa Goa Iron Ore - one of India’s largest producers. While Agarwal's claim of India's vast reserves is true, it is unlikely that such an increase in iron ore production in a short time period is possible. Indian Steel Association predicts that iron ore will be in short supply by more than 100 millions tons over the next few years. This will force imports to increase.

Imports are rising.

India is a net iron ore exporter. It usually ships lower-grade ore to China, while importing material of higher quality to mix with the domestic ore.

According to commodity analysts Kpler, India exported 13.67 million tonnes in the first five month of 2025, with 11.11 million of those going to China.

As domestic steel mills use more ore, exports are on the decline. The average monthly exports for the first five month of 2025 is 2.73 million tonnes, down from 3.13 million in 2024 and 3.70 millions in 2023.

Kpler reports that imports also increased, reaching 4.57 million tonnes in the first five month of 2025.

The Indian imports are expected to double this year, from 6.72 million tonnes in 2024 compared to 6.67 millions in 2023.

Even if imports rise to 10 million tonnes this year, there is a long road to 100 millions tons by 2030.

How quickly India can build up its steel capacity, and how the domestic iron ore miners respond will determine how much of an impact this has.

According to the Global Energy Monitor, India currently has a steel capacity of 20 million tons and another 155 million are planned.

Iron ore imports will be boosted by the under-construction plants, but volumes are expected to remain modest for at least this year and next.

It is most likely that the current trend will continue, with India's low-grade iron-ore exports decreasing and its higher-grade imports increasing over time.

These are the views of a columnist, who is also an author.

(source: Reuters)