The worldwide production of direct reduced iron slipped to 40.5 million metric tons last year, according to data compiled by Midrex Technologies, Inc. The 2001 figure is a decrease of 7.5 percent relative to 2000, and is generally the result of two market forces; a worldwide recession in steel prices, and higher natural gas prices in NAFTA countries. that occurred in the winter of 2000-2001. This was the first decline in nearly two decades of rapid growth.
Steel prices fell to dramatically lower levels than seen in many years. Hot rolled coil in the US was selling for less than 55 percent of the price available just 2 years prior. Scrap prices (adjusted for inflation) in the U.S. fell to levels heretofore seen only twice in history, the 1982-83 recession and the heart of the Great Depression in 1933. Prices of alternative iron units (DRI, HBI, and pig iron) were forced to follow. This, combined with a remarkable spike in natural gas prices, which for a short span was nearly 400 percent above the customary rate, led to the shuttering of nearly all NAFTA DR capacity until the gas prices moderated.
Despite the low price levels and the contraction in the NAFTA nations, most regions of the world held constant or grew in DRI production. Even though the NAFTA market strongly affected Venezuela's merchant plants, strong domestic demand for DRI maintained Venezuela's position as the leading producer with 6.4 million metric ton of output; India moved into second place with steady continued growth, particularly by the coal-based plants, producing nearly 5.6 million metric tons; Iran remained steady at 5.0 million metric tons; Mexico, 3.8 million metric tons; Saudi Arabia, Russia, and Egypt (2.9 million metric tons, 2.6 million metric tons, and 2.4 million metric tons) moved forward to 5th, 6th, and 7th, respectively, as recently commissioned capacity ramped-up production.
Significant changes were seen in the merchant trade. Water-borne trade increased rapidly, reflecting the start-up of a number of HBI plants that were approaching capacity, and closure of DRI plants caught in the gas-steel crisis in NAFTA. To a noticeable extent, the HBI shipments displaced DRI shipments, and similarly, the water-borne increases replaced land shipments.
Midrex forecasts that in 2002 world DRI production will begin to rise and will continue rising throughout the upcoming decade.
For the 15th consecutive year, Midrex plants produced more than two-thirds of the world's DRI, with 66.3 percent of 40.5 million metric tons produced. HYL followed with 19.8 percent and all other technologies, including gas- and coal-based, made up the remaining 13.9 percent.
Midrex 2001 World Statistics Book