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At one time direct reduced iron (DRI) was sometimes referred to simply as a scrap substitute. Now that DRI's use globally extends well beyond that role, Myra Pinkham looks at the factors affecting electric steelmakers' choice of iron units now
While ferrous scrap will continue to be their dominant raw material of choice, particularly prime grades, many major electric steelmakers have been taking a second look at building their own direct reduced iron (DRI) plants to enhance the quality and economics of their charge. Even in North America, where DRI production has been virtually non-existent for several years, recent sustained low prices of natural gas have generated renewed interest.
Overall global production of DRI was up to about 74-76 million tonnes last year, from 70 million tonnes in 2010, according to estimates from major DRI plant suppliers.
Thomas Scarnati, manager of marketing and sales for Mexico's Tenova HYL says there are expectations that combined DRI and hot briquetted iron (HBI) production could increase by over 70% between 2009 and 2015 (see graph). Demand for merchant DRI has actually been fairly flat, so it seems that most of the current and future activity is seen to be coming from captive production facilities, especially those that offer hot charging directly into the EAF.
At about 7.5 million tonnes, the merchant DRI market is actually a relatively small portion of the total global DRI market. Frank Griscom, secretary of the International Iron Metallics Association (IIMA), says that in 2010 - the last year for which statistics are available - 2.1 million tonnes went to the Nafta region, 1.4 million tonnes to China, 700,000 tonnes to South Korea, 600,000 tonnes to Spain, 350,000 tonnes to the Ukraine, 250,000 tonnes to Italy and the remaining 2.1 million tonnes went elsewhere in the world.
"In the near term, while we will be seeing more captive DRI plants built, the merchant market will remain relatively flat," says Griscom.
Steelmakers have become more concerned about their raw materials supply because of increased pricing volatility over the last few years, says Kim Leppold, senior steel analyst for Metal Bulletin Research. She adds that DRI is a good option for many steelmakers looking to increase virgin iron units into a hot charge.
Griscom says...