In Commodity News 30/04/2015
India tops the list of direct reduced iron (DRI)-producing nations, but what remains hidden from the world are the many problems faced by the country’s domestic industry, which has been facing an uphill production task for the last 4-5 years.
High costs and lower demand are just two of the problems plaguing India’s DRI sector. DRI is used by the steel industry in flat as well as long steel product segments, and is also used in infrastructure projects.
Low Steel Demand Hits DRI Producers, Too
According to figures put out by the World Steel Association, in the first quarter of 2015, India, with over 4,500 tons of DRI, headed the list of 14 nations that accounted for 87 % of the world’s total DRI production. The Sponge Iron Manufacturers Association has estimated India to have an installed capacity of 37 million metric tons, although it’s difficult to arrive at an accurate figure due to a general lack of proper research.
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India’s DRI industry has nurtured secondary steel producers who largely use electric arc or induction furnaces to make their steel, for which DRI comes as handy substitute for scrap.
Experts here in the world’s largest democracy say as many as 50% of DRI (sponge iron) units in India have been shut down in the last 4 years. Even in existing units, production was reduced to half the installed capacity during this period.
Now, India’s DRI sector is hoping for sops from the government and a clarity in the overall steel policy to see it through, what many have dubbed, “its most critical phase ever.” What is worrisome is that the falling demand for steel ,especially construction steel, globally, could further, negatively impact the DRI sector.
