World direct reduced iron production exceeded 45 million tons, establishing a new record in 2002 according to data compiled by Midrex Technologies, Inc. This was a 12 percent increase over 2001.
For the 16th consecutive year, MIDREX Plants led DRI technology with 66.6 percent of 45.1 Mt produced. HYL followed with 19.7 percent and all other technologies, including gas-based and coal-based, made up the remaining 13.7 percent.
This increase was the result of a variety of factors. First, and most importantly, was an extraordinary increase in the price of iron units spurred by strong growth in South and East Asia, primarily in China.
Beginning at the low point in the summer of 2001 and continuing to the winter of 2002-2003, the price of some common grades of scrap steels nearly tripled in Far Eastern markets. The effect was felt around the world and fostered increased iron production almost everywhere. This can be viewed as the long awaited recovery from the Asian crisis in 1997, which had precipitated the longest and deepest trough in iron prices in over a century.
Next, there was unprecedented growth in India in coal-based DRI production. The higher value of the iron product brought forth an increase in capacity use there by numerous rotary kiln plants as well as the commissioning of some capacity that had been delayed. Indian coal-based DRI production in 2002 was 35 percent greater than in 2001.
Also, there was some recovery in North America (including Mexico) from the spike in natural gas prices experienced in 2001. Although gas prices remained volatile, North American DRI production was 46 percent greater than the previous year.
Higher prices also initiated more trade in DRI and HBI. 11.3 million tons were transported in 2002, a 20 percent increase over 2001. Of this, 57 percent was shipped as HBI, the remainder being DRI. Sea borne trade grew to more than 6.7 million tons, of this HBI was 76 percent.
Midrex forecasts continued growth in 2003, as favorable prices for iron production continue. However, following such a long period of extremely low prices, no new capacity has been contracted and therefore, production increases will be from improved capacity utilization rather than the bringing on of new capacity. Thus, for this year, only moderate growth should be expected.