Mumbai, April 14: Sponge iron producers are a happy lot with their capacity additions paying off as they stepped up production to cash in on rising global commodity prices.

As a result, India has emerged as the largest producer of sponge iron in the world in 2003 with a production of 7.7 million tonnes.

Industry analysts feel that in the years to come, India is set to improve its performance with leading companies envisaging capacity expansion. Jindal Steel and Power Ltd (JSPL), a coal-based sponge iron producer, is planning to enhance capacity by 6.6 lakh tonnes, taking the total to 13.1 lakh tonnes by the end of 2004-05, officials said.

Some major domestic sponge iron producers include Essar Steel, Vikram Ispat, Ispat Industries, Monnet Ispat and Tata Sponge Iron (TSIL). In 2003-04, Essar Steel increased its capacity to 2.4 million tonnes from 1.76 million tonnes, thus making it the largest gas-based sponge iron producer worldwide.

Last year, TSIL had announced that it would install a 1.5 lakh-tonne third kiln to raise its capacity to 3.9 lakh tonnes.

A recent note from the Sponge Iron Manufacturers’ Association (SIMA) said India, with a production of 7.7 million tonnes in the last calendar year, accounted for 15.57 per cent of the world production.

India, therefore, has established a clear lead of 0.8 million tonnes over Venezuela, the second largest producer at 6.9 million tonnes. Mexico occupies the third slot with a production of 5.6 million tonnes. While production of coal-based sponge iron at 3.70 million tonnes saw a growth of 18.78 per cent, the gas-based units witnessed 16.02 per cent.

According to Midrex, a technology supplier for making sponge iron, global production of the commodity was at 49.45 million tonnes, 10 per cent more than that in 2002.

“As in 2002, the growth was driven by a remarkable economic boom in China and in its surrounding countries. As an example of that growth, by the end of the year, China was consuming 32 per cent of the entire world supply of construction steels. This pushed iron unit prices to their highest levels ever in nominal terms, and their highest in 30 years in real terms,” Midrex added.

Officials from one of the leading domestic manufacturers said gas-based units are beginning to feel comfortable as supply of feedstock is improving.

“Gas availability was a major issue till now. However, with the project of Shell coming up and Petronet LNG under way, its availability will improve substantially,” the official added.