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World DRI output to grow ‘quite considerably’

Keywords: Tags  steelmaking, raw material, scrap substitute, direct reduced iron, DRI, annual output, forecast, Midrex Technologies Inc. Nucor Corp.

LOS ANGELES — Global production of direct-reduced iron (DRI), aided in part by the increasing availability of natural gas, should increase by at least 5 million tons annually over the next decade with the addition of several large new plants, according to Midrex Technologies Inc.

The Charlotte, N.C.-based DRI plant builder said in a quarterly report that world DRI output in 2013 totaled a record 75.2 million tons, up 2.8 percent from 2012.

Even though DRI production has increased by an average of just under 1.5 million tons annually over the past five years, the industry is expected to grow "quite considerably" in the future, with 16 million tons of capacity under construction, Midrex said.

The Middle East and North Africa (MENA) led the way, producing 32.4 million tons of DRI last year, up 19 percent from 27.2 million tons in 2012. Asia/Oceania was next with 20.5 million tons in 2013, down 9 percent from 22.6 million in 2012.

Latin America—including Mexico and the Caribbean—produced 13.8 million tons, down 8.8 percent from 2012. Eastern Europe and the Commonwealth of Independent States (CIS) produced 5.3 million tons in 2013, up 1.7 percent, while sub-Saharan Africa produced 1.41 million tons, down 10.2 percent from a year earlier.

North America—at 1.3 million tons—and Western Europe—at 500,000 tons—were the world’s two lowest-producing regions. But Midrex said U.S. output, spurred by shale gas production, will lead to the construction of two to three more DRI facilities, representing an additional 5 million to 6 million tons of annual capacity being built by the end of this decade.

Midrex called last year’s growth "remarkable" since output in India and Venezuela saw a "significant decline" in 2013. Production in India totaled 17.8 million tons last year, down 11.4 percent from 20.1 million tons in 2012, and down 23.9 percent from 23.4 million tons in 2010, due in part to falling availability of domestic iron ore and high natural gas prices.

However, several Indian companies are building facilities to make DRI using "syngas" from coal instead of natural gas, with two of these plants expected to be commissioned this year, Midrex said.

Venezuela’s production fell 39.9 percent in 2013 to 2.8 million tons from 4.61 million tons in 2012, as its industry suffered a shortage of iron oxide pellets due to the "lack of funds" to support its supply chain and infrastructure, Midrex said.

Four Midrex direct reduction plants started up in 2013: two in Iran, one in Bahrain and another in Pakistan. Six more are under construction in five countries including the United States, with a combined annual capacity of 10.1 million tons, Midx said.

Meanwhile, Charlotte, N.C.-based Nucor Corp. is ramping up a new HYL technology facility in St. James Parish, La., while three additional modules with a combined capacity of 5.2 million tons are being built in Egypt, India and Venezuela, according to Midrex.

DRI production should reach 200 million tons around 2030, Midrex predicted.

Midrex said its own technology accounted for 63.2 percent of world output last year, while the HYL/Energiron process marketed by Milan-based Tenova SpA subsidiary Tenova HYL represented 15.4 percent. Coal-based DRI accounted for 21.2 percent.

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