During the induration of pellets, temperature and oxygen partial pressure influence the formation of different phases and microstructure. With increasing the pellet size, these thermo-chemical conditions vary across its cross section. The time difference between the oxidation of the pellet surface and the core increases with increasing pellet size, i.e. the oxidation takes place under different conditions resulting in different phases and microstructure. In this study commercial pellets of different sizes (8–16 mm) were studied for their physical, mechanical and metallurgical properties. Pellets in the size range of 10–12.5 mm showed superior properties. Electron and optical micro structural studies with image analysis revealed that hematite content, pore density, amount and distribution of silicate melt of different sized pellets are different and distinctly affect the pellet quality. SEM-EDX analysis and X-ray mapping techniques revealed that Mg has a specific distribution pattern across the cross section of the pellet.