A recent report by Indian ratings agency CRISIL has revealed that Indian production of direct reduced iron (DRI), also known as sponge iron, achieved a compound annual growth rate (CAGR) of 8% to 51.5Mt in 2024 from 34.7Mt in 2019, outpacing the 5% growth in crude steel output.
Demand for DRI comes from long steel manufacturing, the agency says. The share of long steel production rose from 51.5% in 2019 to 54.8% in 2024 driven by construction and infrastructure activities.
CRISIL believes that the trend is likely to reverse over the next three years as the share of flat steel production is expected to rise with large companies enhancing their capacity through the blast furnace-blast oxygen furnace (BF-BOF) route.
The two key raw materials for DRI production are iron ore and coal. India is self-sufficient in iron ore, but imports 30-40% of its steam coal needs, mainly from South Africa and Indonesia.
Most of the mid-sized and smaller manufacturers blend DRI to produce long steel through the electric arc furnace or induction furnace (EAF or IF) route and major companies manufacture steel predominantly through the BF-BOF route.
Source: CRISIL