Is Saudi Arabia a Prospective Market for Indian Pellet Exporters?

Saudi Arabia, the 2^nd largest DRI producing country in Middle East, produces crude steel through EAF route; no blast furnace exists in the region. With no expansion plans presently, its total DRI capacity is 5.3 MnT pa.

Saudi Arabia contributed 20.8% of total Middle East Crude Steel Output in 2013

The DRI plants manufacture commercial grade material and are dependent on 100% imported Iron Pellets. They prefer Pellets with 66% or above total Fe as their raw material. Vale (Oman), Samarco (Brazil), LKAB (Sweden) and Arcelor Mittal (Canada) are the major Pellet suppliers to Saudi Arabian DRI units.

Hadeed, the first integrated Iron & Steel complex in Saudi Arabia, is the largest DRI making company and uses it for manufacturing finished steel. 

Direct Reducing Iron Company (DRIC), which operates as a subsidiary of Al -Tuwairqi Holding, uses the material for both captive and export sale. Dammam’s King Abdulaziz Sea Port, located on the coast of the Persian Gulf, is the second largest port of Saudi Arabia. 

Capacity in MnT pa
Source: SteelMint Research

Indian Pellet manufacturers based in the eastern region have been working out on possibilities of a trial and opportunity market. The DRI plants which are accustomed to using better grade imported Pellets at a high cost, may prefer low cost material from India too.

Considering the above and Saudi Arabia being a high Fe Pellet importing country, the Indian Pellet producers have a ray of hope to tap this potential market that exists in this country.

SteelMint Research indicates that the DRI plants can selectively blend and use the Indian Pellets in small percentages that would not hamper the quality of the finished DRI product. Delivery time from India in 7-10 days is quite less as compared to imports from other markets which take almost a month. Price cuts to induce the Saudi Pellet buyers may also play a crucial role.