Iran – world’s leading crude steel and DRI producer is all set to export DR grade pellets. Iran’s gas based DRI plants use DR grade pellets as basic raw material for steel making. The country has enough availability of cheaper electricity and abundant supply of natural gas, which drives the production of low conversion cost of pellets to DRI.
The country which was struggling with self-sufficiency of iron ore pellets since quite a long time is now set to export pellets post expansions of pelletising capacity.
With 3 new pelletising capacities coming up after launch of Golgohar, MIDHCO’s Sirjan Iron and Steel Company, and Sangan Iron Ore Company, the country’s pelletizing capacity moved up to 32 MnT per year. Presently Iran’s installed pellet capacity is around 60.4 MnT pa. However Iran’s domestic pellet demand stands at around 28-29 MnT. Hence, presently Iran is in a position to export the surplus pellet amount.
Government is also lending support to the local pellet producers and is expected that they may remove export duty of 15% from Q2 2017.
Iran’s pellet production increased 15.8% Y-o-Y – During the 11 months of the past Iranian year, pellet output in Iran reached 23.3 MnT, up 15.8% Y-o-Y, according to IMIDRO. Mobarakeh Steel Company produced the largest part of 6.7 MnT in the same time period, followed by Golgohar with 6.4 MnT, Khouzestan Steel Company with 5.6 MnT, Chadormalu Mining and Industrial Company with 3.3 MnT and MIDHCO with 1.2 MnT.
Potential export destinations for Iranian Pellets- As per recent reports, Iran’s preferable destination for pellet exports could be China considering China’s increasing apetite for iron ore fines, DR grade pellets, lump etc. Iran is also an active iron ore exporter to China. During the 11 months of the Iranian year FY17 (i.e. 21 Mar’16-19 Feb’17) Iranian miners exported 18.5 MnT of iron ore. Out of this, share of export to China was 96.6%, according to Iranian Mines & Mining Industries Development & Renovation Organization.
Also MENA (Middle East & North African regions) also have much high potential and are facing shortage of DR grade pellets after Samarco accident. It is to be noted that Samarco was one of the three to four key global DR pellet suppliers.
Iran’s crude steel output on uptrend – According to World Steel Association report, Iran’s crude steel output increased by 11% Y-o-Y from 16.15 MnT in CY15 to 17.89 MnT in CY16. According to Iranian Ministry of Industries, Mines and Trade, Iran’s crude steel output is projected to increase reach 55 MnT by 2025.
However current pellet surplus in Iran is temporary as Iran government has planned to raise country’s crude steel output to 55 MnT by 2025. Thus increasing pellet output will be utllized majorly in its domestic market itself.
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