Explosion at a Steel Mill in Chhattisgarh, India: May Trigger Regional Iron Ore Price Decline and Steel Price Increase

On January 22, 2026, a serious accident occurred in Chhattisgarh, a key steel-producing hub in central India. A severe explosion took place at the plant of Real Ispat & Power Ltd (RIPL) in the Baloda Bazar-Bhatapara district, resulting in at least 6 confirmed fatalities and multiple severe injuries. This incident is not an isolated safety tragedy but occurred at a sensitive time when the Indian steel industry is undergoing a critical transition. Just two weeks before the accident, India's largest iron ore miner, National Mineral Development Corporation (NMDC), had announced a reduction in iron ore prices in response to weak domestic demand and buyer resistance sentiment. Meanwhile, despite abundant domestic reserves, India's iron ore imports in 2025 hit a seven-year high.

The plant is a well-known integrated steel mill locally, possessing complete facilities including a coal-based direct reduced iron (DRI) rotary kiln, steelmaking shop, and rolling mill line. According to testimonies from onsite workers and preliminary police reports, the facility that exploded was the Dust Settling Chamber (DSC)

connected to the coal-fired rotary kiln. Accident Steel Mill Profile:

Steel Mill Name: Real Ispat & Power Ltd (RIPL)

Location: Bakulahi Village, Baloda Bazar District, Chhattisgarh (near the Raipur industrial cluster)

Main Products: Coal-Based Direct Reduced Iron (DRI), Mild Steel Billets, Long Products (TMT rebar, wire rod, etc.), and captive power plant electricity.

Capacity Estimates:

• DRI Capacity: Estimated at 600,000 mt/year.

• Steelmaking and Rolling Capacity: Equipped with induction furnaces and a rolling mill, mild steel billet production is approximately 750,000 mt/year, rebar and construction materials capacity is about 870,000 mt/year, and other deep processing and industrial wire rod capacity is around 300,000 mt/year.

Core Impact of the Accident:

The accident caused 6 deaths, constituting a major safety liability incident. Based on past experience (such as the responses following the Bhilai accidents in 2014 and 2018), there is a high probability that local authorities will immediately launch comprehensive safety inspections targeting all private DRI plants and induction furnaces across the state. A large number of small and medium-sized steel mills may be forced to temporarily suspend production or reduce operating rates due to compliance checks. This is expected to lead to a 5%-10% decline in the overall steel operating rate in the region over the next 1-2 weeks.

Chhattisgarh is India's direct reduced iron (DRI) production hub. The plant's shutdown is expected to reduce spot DRI supply in the Raipur market by approximately 1,600 mt per day. While the impact on global supply is negligible, it will cause immediate tightness in raw material supply for secondary steel mills (electric furnace steel mills) in the Raipur-Durg region, potentially triggering a short-term spike in regional DRI prices.

In mid-January, DRI prices in the Raipur area had already rebounded due to some restocking demand, reaching around ₹26,400/mt (approximately $293). The sudden shutdown of RIPL, coupled with potential subsequent safety inspections of surrounding plants, is highly likely to push up spot DRI prices in the Raipur area in the short term.

DRI plants like Real Ispat are major local buyers of iron ore lumps and pellets. If a regional shutdown and rectification campaign erupts in the Raipur area, local demand for high-grade lumps will instantly freeze. In the short term, the domestic Indian lump premium may come under pressure and decline, as major buyers (DRI plants) dare not operate.

Against the backdrop of robust iron ore demand, this actually signals a supply-side bottleneck. Although India's raw material demand is strong, its backward processing and conversion capacity (especially in the private DRI sector) may be unable to safely accommodate such high growth rates. This will lead to a short-term phenomenon of unsold raw materials (iron ore) alongside rising prices for finished products (steel).

It is noteworthy that India's iron ore imports hit a seven-year high in 2025, reaching 12.2 million mt, with JSW Steel alone accounting for 80%. Currently, the Indian iron ore market exhibits severe dual polarization. Coastal steel mills (like JSW) are importing large quantities of high-grade ore due to logistical advantages and falling global ore prices (below $100/mt); whereas inland steel mills (like RIPL) are constrained by logistical bottlenecks and reliant on NMDC. To address this raw material "bottleneck," RIPL has been attempting to build its own pellet plant (0.8 MTPA), originally scheduled for commissioning in January or Q1 2026. The explosion will inevitably delay the commissioning and operation of this critical project. This means RIPL will remain exposed to raw material price volatility and unable to reduce costs as planned through self-produced pellets.