Iran: Potential Market for Indian Pellet Suppliers with shortfall of 10 MnT

Iran, the largest steel producer in Middle East is facing a huge scarcity of Iron Pellets which is the basic raw material for steel-making.

There is no surplus Pellets in Iran at this stage, so many DRI plants are running short of Pellets. Moreover, good quality lumps is not available too and contains 55-58% total Fe. All Iranian DRI plants are gas based because of cheaper and abundant availability of natural gas.

About 80% of Iran’s Crude Steel comes from EAF route by using 75-80% DRI

Iran has 23.4 MnT pa installed DRI capacity presently and requires about 33.9 MnT pa Pellets. Owing to poor supply of Pellets at 23.8 MnT pa currently (refer Map below), some of the DRI plants are non-operational or running at lower capacity.

Also, low availability of natural gas & power for industrial purpose (rise in supply for domestic consumption) during winters, accounts for less capacity utilization of DRI plants.

Is Iran a Potential Market for Indian Pellet Suppliers?

SteelMint research indicates that Iran is a potential market for Indian Pellet exporters on the following reasons.

• On one hand, Iran is facing shortage of Pellets and on the other, many new DRI plants are under construction.
• Middle East Pellet exporter namely Bahrain Steel, which produces 5 MnT pa Pellets is focusing on sales to Oman, UAE & Saudi Arabia.
• Vale’s Oman plant is exporting Pellets to Japan & Korea currently.
• Canada based Arcelor Mittal having over 9 MnT pa Pellet plant isn’t supplying the material to Iran as of now.
• India’s Pellet producing capacity is increasing rapidly and about 17 MnT pa Pellets will be available from big players for merchant sales (domestic or export sale) in FY15; it is 13 MnT pa presently.
• Gas based DRI plants in Iran procure total Fe 66% DR grade Pellets from domestic and outside Pellet suppliers. Owing to shortage, they are ready to accept BF grade Indian Pellets too at reasonable rate, which will be used after blending.
• Total Fe 65% lumps is also one of the potential commodity that can be exported from India.