Qatar Steel explores DRI Import Prospect since Deficit – SteelMint Research

Qatar Steel, one of the leading subsidiaries of Qatar industry, the chief pillar of industrial sector in the country, is looking at DRI import opportunity.

The companies EAF route for Steel making is operated by using 87% in house produced gas based DRI. Qatar Steel operates 2 DRI modules. 

The designed capacity of 0.4 MnT pa DRI after enhancement, started producing 0.8 MnT pa. The 2nd module is manufacturing 1.6 MnT pa, which was achieved in the year 2013. The latter has two options for product i.e. either 50% DRI & 50% HBI or 100% DRI.

Source: SteelMint Research

Procures Pellet via Long Term Supply Contract

Qatar Steel imports DR grade Iron Pellet having Fe% 67.5-67.8, which is their basic raw material for DRI production. It procures Pellets through long term supply contract from Vale in Oman, LKAB in Sweden and Samarco in Brazil, based on international benchmark premium set. Qatar Steel has jetty facilities.

Qatar Steel signed a 3 years long term Pellet supply contract with Vale last month. The former is also in long term contract with Samarco, valid till 2016.

SteelMint Research indicates that close to USD 320/MT (i.e. about INR 19,500/MT) is the cost of producing 1 MT premium grade DRI in GCC region, from high quality Pellets. Natural gas and electricity are cheap; they are Government controlled and subsidized. There are mainly industrial water production plants. So, natural water sources are scant and lot of money is put in the desalination plants.

Importing DRI pose a Challenge

Qatar Steel, which used to export DRI to Far East (Korea, China & Indonesia), India, Middle East (Egypt & Iran), Europe (Spain) and within GCC (UAE, Kuwait & Saudi Arabia), is now looking at import market.

With commissioning of new Electric Arc Furnace (EAF) in Feb 2014, Qatar Steel’s molten Steel production is expected to increase to 3.1 MnT pa in 2014. However, DRI capacity still remains 2.4 MnT pa. In such scenario, Qatar Steel is left with no option but to procure imported metallic’s.

As of now, the company is importing DRI from United Steel Company (SULB), located at Hidd (Bahrain) and is also exploring import possibilities from other regions.

Hardly any country is exporting DRI during these days. Venezuela, which once exported DRI, has cut back production because of domestic Pellet scarcity and funds’ deficiency. Gas based DRI export from India may well cost about USD 430/MT (INR 26,200/MT) CFR Qatar.