Direct Reduced Iron Market Trends

Growth Drivers

• Growing Integration of Gas Based Direct Reduction Technologies Instead of Coal Based Methods - The gas-based technologies aid in reducing carbon footprints in steel-making procedures. These methods reduce or eliminate reliance on coal and coke, both of which are major carbon emitters, through the use of natural gas or hydrogen as a reducing agent. The adoption of gas-fueled direct reaction technologies is an effective means for reducing carbon emissions and promoting sustainability in the steel sector, given that firms are seeking to achieve carbon neutrality as well as comply with more stringent environmental regulations. Direct reduction using natural gas is a proven method that has been in use for many years. In 2019, its production rate was close to 82 million tons.
• Integration of Industry 4.0 Technologies - Efficiency enhancement and advanced process optimization are enabled with the integration of Industry 4.0 in DRI production. Automation and robotics have the potential to replace significant procedures such as mixing, material handling, feeding, and discharge operations. Operational efficiency can be substantially improved through the automation of redundant tasks and reductions in human intervention. In order to determine trends, patterns, and anomalies that optimize the parameters in the production process, reduce waste as well and improve total productivity, AI-powered algorithms may also analyze manufacturing data from an instant point of view.

Challenges

• High Initial Status and Operational Costs - Significant capital investment is required for the establishment of a DRI plant. Complicated engineering, procurement, and construction processes including the installation of technology like Direct Reduced Reactors, Gas Reforming Systems, or Gas Turbines are required to build a DRI plant. There may be considerable costs associated with building and commissioning a power station, as well as the necessary infrastructure. Apart from the capital investments, there may also be substantial operational costs associated with DRI production. These are predicted to hamper the direct reduced iron market expansion in the projected period.
• Fluctuation in Raw Material Prices Especially in Natural Gas - There are generally long-term planning and development phases in DRI projects. Anyhow, the possibility of these projects depends on their price assumptions and current market conditions. Such calculations are subject to uncertainty as a result of volatility in gas prices. It can lead to unfavorable financial results that render the DRI project economically unviable if prices are higher than projections made at the initial evaluation stage. This could harm the growth of the globally distributed renewable energy market, by making potential investors and companies hesitate to invest in such power plants.
• Impact of the COVID-19 pandemic is set to hamper the market growth in the estimated period.