Iran, the largest crude steel producer in the Middle East and world’s 2nd largest DRI producer, has enough availability of cheaper electricity and abundant supply of natural gas, which drives the production of low conversion cost of pellets to DRI. It, however, runs short of high quality lump ore. Iran’s gas based DRI plants use DR grade pellets as basic raw material for steel making. Iran has a total installed DRI capacity of 22.3 MnT and expected to be 30.6 MnT by 2016 end.
Iran produced just above 16 MnT of crude steel and 1.45 MnT DRI in 2014. This indicates that steelmaking in Iran is predominantly through the DRI route. With Iran’s appetite for high grade pellets increasing, there is something to cheer for Indian pellet industry, which is operating at less that 40% capacity.
According to Iranian Iron Ore Producers and Exporter Association, about 7-8 MnT imported pellet is required in a year. Last year, Iran produced 21 MnT of iron pellets, however, its demand reached to 28-29 MnT.
KIOCL Shows Trade Interest in Iranian Market
Recently, an Indian pellet maker, KIOCL, finalized a deal with Iran to supply 1 MnT magnetite iron ore (nearly 65%) to Mangalore based 3.5 MnT pellet plant. The pellet produced will be exported back to Iran.
Mr. Malay Chatterjee, Chairmain of KIOCL said, KIOCL could sell 2 MnT of pellets to Iran in order to fulfill its local demand.
Essar Turned out to be Largest Indian Pellet Exporter to Iran
Essar Steel, having largest capacity of pellet production in India (6 MnT at Paradip and 8 Mnt at Vizag), played major role in Indian pellet export to Iran in FY15 and in FY16 till now. Essar Steel ships high grade of iron pellets (Fe 66%) to Iran.
In FY15, out of the total pellets exported from India, 70% (0.60 MnT via 12 shipments) was shipped to Iran. Essar Steel was the largest exporter at 0.51 MnT via 10 shipments. In FY16, total five shipments have been made to Iran. Total 895,700 MT has been exported via 18 shipments since March’14 till now to Iran.
Total Pellet Exports Shipments in FY15-16 to Iran
Qty in MnT
Source: SteelMint, Customs,Cybex
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