While India leads the world in Direct-Reduced Iron production, the domestic industry has been facing an uphill production battle for the last four years.

Why Manufacturers Need to Ditch Purchase Price Variance

India’s DRI sector is hoping for help from the government and clarity in the overall steel policy to see it through, what many have dubbed, its most critical phase ever.

Demand DRIs Up

What is worrisome is that the falling demand for steel, especially construction steel globally, could further, negatively impact the sector. Some are quick to note that India’s DRI units need not worry much on this front as the market in India has remained insulated from global trends owing to steadily increasing domestic steel consumption.

Two other risks facing the sector are imported scrap being used by steel companies in India, DRI is an excellent substitute for scrap in electric arc furnaces, and the reliance by medium-sized DRI producers on inferior technology. That means technological limitations stop the producers from exploiting inferior grades of iron ore and coal.

Further, the limited availability of coking coal only motivates steel production in the country through a combination of DRI and blast furnace. What has added to the misery is the recent round of coal auctions held by the federal government.

Unable to Bid in Coal Auction

DRI companies were unable to participate in the auction, and a hitherto discounted source of fuel was lost, pushing the cost of DRI production by an estimated 40%, some have said. The DRI segment has brought this to the government’s attention.

While many steel companies prefer to use DRI instead of scrap, the slowdown in the global steel industry has seen some amount of the steel melting scrap being imported into India because of lower import duties. What makes steel plants happy in such cases, besides the cheap duty, is the fact that the imported scrap percentage works out to be higher, which eventually negates the cost of imported scrap.

To many analysts, the DRI sector in India is poised on the cusp of a turnaround, but only if there is adequate government backing as well as support from domestic steel companies. Even then, it could easily take four years for the industry to come back to an even keel and ramp up production.


Indeed, so attractive is the opportunity that shale gas and natural gas prices bring to direct reduced iron (DRI) and steelmaking – which we began outlining in the first part of this article – that Nucor will not be alone. Voestalpine of Austria has already announced plans to invest about $740 million in a new […]


As many will tell you, there have been and will continue to be winners and losers in the metals industry from the lower gas prices that shale gas has created. Even within industries, some will see opportunities where others do not. So it is for the steel industry – and in particular, the split between […]

{ 1 comment }

While agreeing on the supply and import challenges facing the North American industry, on the demand side, chief executives of major producers US Steel, Evraz and Severstal sounded hopeful across the board. They’re optimistic about not only the sustainability of recent automotive and housing market demand increases, but also on oil and natural gas development […]

{ 1 comment }

The time is here again for Platts’ scrap and steel conference, which kicked off yesterday with the “Scrap Seminar: Raw Materials Pricing Outlook, Market Trends, and the Surge of Scrap Alternatives.” We’ll take a stab and guess that the MetalMiner audience may be most interested in the scrap ‘pricing outlook’ and ‘market trends’ components, so […]


Rick Blume, GM Commercial for Nucor’s steelmaking group, strode on stage to the muscular sounds of steel pedal as a video played in the background, showing how Nucor is at the forefront of the steel industry in many ways. But all the awesome bluster aside (thanks for your sponsorship, Nucor!), Rick got down to brass […]