For a country from which sanctions were lifted only a year ago, Iran seems to be picking up pace and how! Investments, boost to construction, increasing steel production, pellet imports – Iran is pushing itself up after decades of remaining stagnant. In this particular instance, let’s talk about the nation’s DRI production.
Iran took the lead in DRI production in 2016 and is expected to close the year at 14.9 million tonnes. India slipped to the second spot with estimated 13 million tonnes production in CY 2016. Given Iran’s strong steel targets, Iran may remain the leader in production in 2017 too. However, India’s increasing steel capacity may give Iran a tough competition.
Even as production targets are increased, steel consumption in the domestic market could take longer to follow suit. Therefore, Iran is relying on export of semi -finished and finished steel. During Jan-Nov 2016, Iran produced about 14.9 mnt of DRI, up by 10.8% y-o-y. Higher production results are attributed to an 11% uptick in crude steel output, which reached 16.4 mnt over the period under review.
During the same period, Indian DRI producers reduced output by 14.8% to around 13 mnt y-o-y, even as crude steel production increased by 7.1% y-o-y. Being competitive and adherent to environmental concerns, scrap attained the status of preferred material in the past year.
Importantly, while 75% of Indian DRI plants are coal-based, Iran utilizes its vast natural gas reserves for competitive production. While coal gasification is an economic and easy to adapt technique for DRI production, its competitive edge is eroded in the present scenario of raw material prices. Also, the government levied an environment cess on steel producers using coal, which increased cost of production.
In the coming year, while India is coming up with new steel capacities, the material of choice is expected to be scrap due to better efficacy; Iran will be pushing its 50 mnt steel production by 2025 target. 2017 may also remain Iran’s year where DRI production is concerned.
Source: Steel 360 Magazine Jan’16 Issue