In 2013, the world’s direct reduction iron (DRI) industry set another new record having produced 75.2Mt, according to data compiled by Midrex Technologies Inc. and audited by World Steel Dynamics.
The 2013 figure was an increase of 2.8% (or 2Mt) over 2012, which is regarded as 'quite remarkable' by Midrex considering the economic forces that affected the industry.
Where technology was concerned, MIDREX DRI plants led the way, taking a 63% share of the market, followed by rotary kilns (largely in India) at 21% and Energiron plants (15%).
The DRI industry has grown in eight of the past 10 years. Output in 2013 was more than 85% greater than in 2001.
Factors that have placed a drag on growth in the preceding years have continued, but were overshadowed by the demand for direct reduced iron.
The Middle East/North Africa (MENA) region was the primary growth area, growing by an additional 5Mt over 2012 numbers.
The Kingdom of Bahrain entered the group of DRI producing nations as the SULB’s new 1.5Mt/yr MIDREX Plant began operation. Iran increased output by nearly 3Mt primarily via the ramp-up of a number of recently commissioned modules.
Elsewhere in the region, Saudi Arabia and the United Arab Emirates set new records for national DRI production. Oman increased production slightly for the year and Libya increased tonnage as its industry continues to rebuild after the civil war. Altogether MENA produced 32.4Mt of DRI, which was 55% of global production of natural gas-fueled DRI. Outside of MENA, additional growth was seen in Russia where a new national record production of 5.3Mt was achieved.
Despite declining production volumes in India and Venezuela, world DRI production increased in 2013. India fell to 17.8Mt down from an all-time high of 23.4Mt in 2010. The main reasons for the decline were: lower availability of domestic iron ore due to regulations, licensing related to environmental requirements and extremely high natural gas prices.
A number of companies in India are building facilities to make DRI using syngas produced from coal in place of natural gas. Two of these facilities are expected to be commissioned this year. Since 2010, natural gas-based DRI production in India is down by more than 50%. DRI production by rotary kiln modules in India also declined in 2013 to less than 16Mt.
Venezuela continued to struggle with DRI production – down 40% from 2012 – and this meant that it was down to less than one-third of its maximum production in 2005. The immediate reason is a shortage of iron oxide pellets to feed the DRI plants, but the underlying reason is a lack of funds for maintenance throughout the supply chain.
In India the ore supply problems was the largest factor restricting production. High natural gas prices and difficulty acquiring gas were also problems. In contrast, steadily growing demand as the world economy continues to recover from the financial crisis of 2008/2009 helped to further production.
Shale gas exploration in the USA and Canada has led to lower natural gas pricing in North America and this has encouraged the building of new DRI capacity. One plant has already begun commercial operation and another project broke ground for construction in April this year. More facilities are expected to be contracted in the USA over the coming years.
DRI production Forecast
Approximately 16Mt per year of DRI capacity are currently under construction. A conservative view of the situation is that some of the plants/projects are in locations where it will be difficult to maintain schedules as planned with economic and political factors possibly slowing completion. Midrex forecasts that those plants currently under construction will come on stream over the next three years.
Recent annual DRI production increases have been impacted by production declines in India and other areas. Midrex believes that there will be increases of 5Mt/yr and more over the next decade.
In the USA alone because of shale gas exploration, which has lowered natural gas prices, it is expected that total DRI production will be at least 10Mt per year by 2020. Nearly half of this figure has already been built or is in the construction phase. The USA will most likely see up to three more facilities, representing 5Mt to 6Mt of capacity being built in North America by end of the decade.
In areas without access to low cost natural gas, other technologies are being explored and implemented. In India plants using syngas produced from coal instead of natural gas for DRI production are underway and at leastone plant is exploring supplementing its natural gas supply with coke oven gas (COG) to maximise existing resources and lessen dependency on natural gas.