EDITORIAL

Dear Readers,After a long time smile has come back on the faces of DRI & steel producers.
Undoubtedly, it is due to the many policy initiatives taken by Government of India andparticularly Ministry of Steel. Presently, there is a good demand of steel from
infrastructure, housing and automobile sectors leading consumption growth out pacing
production.
Major impediments in the steel growth are restricted availability & high price ofiron ore/pellets and non coking coal. SIMA has been flagging these issues at different
forums. We believe that Government will take some steps to resolve them .
It has been endeavor of SIMA to disseminate the knowledge about the latest
innovations for the sustainable growth of Indian DRI and steel industry. With this inview, SIMA organized 4th India International DRI Summit, 2018 on 13th August, 2018.
The event was attended by Union Minister of Steel, Member, NITI Aayog, Union
Secretary of Ministry of Steel. Experts from USA, UK, Austria, China, UAE and India
presented the papers. Besides them, more than 175 stakeholders attended thisprestigious event. Glimpses of the summit have been included in this edition.
It is a matter of proud for us that some of our members have got the national
awards from the Hon’ble Steel Minister details of which have also been included in thisedition.
I wish a very bright future to our readers.

Deependra Kashiva
Executive Director

CHAIRMAN’S MESSAGE

The issue of “DRI update” brings to you yet another initiative of SIMA.
You may recall our jointly hosting an investors conference in Mumbai on
August 13 last year, or the participation of SIMA in the task force set up by
NITI Aayog during November to or the contribution to drafting of the NSP,
organizing international conference, meeting sponge iron makers who are
non members of SIMA to make them aware of SIMA activities, getting
KPMG to study the sponge iron industry prospects and so on. There aresome more initiatives in the pipeline. DRI Update is intended tocommunicate to you a larger picture of sponge industry. We hope that you
stand to get such updates periodically and also get an opportunity tocontribute by your views, your questions or comments through this update.
I wish SIMA and DRI Update a great success.

D.P. DeshpandeVice CHAIRMAN’S MESSAGESIMA has been in the forefront of Policy advocacy for the qualitative
enhancement of the Indian Steel sector especially with regard to the needto ensure adequacy and accessibility of raw material and also in joining
hands with other stakeholders to provide an environment of growth for thiscore sector. It is indeed heartening that SIMA has been the torchbearer forenabling the growth of the Sponge Iron industry in India. The initiation of
an independent study of this sector for the developmental and growth of
the sponge iron industry and the implementation of the key suggestions
made therein should further galvanise the industry. The international DRI
summit and the deliberations therein reinforces the role SIMA has continued
to play over the years towards ensuring quality inputs for the steel sector.

Shivramkrishnan H.

Innovations – Key to Survival and Sustainable Growth of Indian DRI
industry
Deependra Kashiva, Executive Director&
D.P. Deshpande, Chairman
Sponge Iron Manufacturers Association

Indian DRI industry’s growth journey started with the initiative of Ministry of Steel when they
set up a demonstration plant at Paloncha in 1980 with the assistance of UNDP to test thesuitability of Indian iron ore and non-coking coal for the production of DRI. The basic reason
for this move was second highest foreign exchange outgo in the form of import of steel
melting scrap which is alternate to the DRI.
Then in 1983, Odisha Sponge Iron Limited set up India’s second coal based DRI plant. The third
coal based DRI plant was set up
by Tatas in 1985 based on theirown technology. To push up
further growth, DRI industry
was de-licensed in 1985 baring
certain location restrictions
much before the de-licensing
and deregulation of Indian
economy in 1991.
DRI capacity was doubled during
2005-10 basically to meet the surge in steel demand as DRI based steel plant can be set up in 2
/ 3 years period compared to the 8/10 years normally taken by Blast Furnace based steel
plants. To put a further push to the DRI, production and easily availability of natural gas, three
coast based DRI plants came into existence between 1990 and 1993. Today with a capacity of
46 Million Tonnes per annum and production of more than 24 Million Tonnes, India is largest
DRI producer in the world. Indian DRI industry within it’s existence of 23 years became
world’s largest producer is maintaining this distinguish achievement since last 15 years.
But during this journey, the industry faced many problems some of which are still continuingsuch as restricted availability of iron ore and its high price, uncertainty in the availability of non
coking coal, non availability of natural gas, high level import of steel melting scrap, logistic

related issues, lack of technology drive, etc. These issues are not being covered in this article
as the focus of the article is on innovations.
Coming back to the theme of this paper following will demonstrate how innovations can leadhigher productivity without much capex and will in turn ensure better financial performance:
There are over 300 DRI plants in India. Out of which at least 100 rotary kilns are of the size
350 TPD and above. Many of them have already started to produce at 400 TPD. Arguably thesekilns can be expected to produce
upto 500 TPD at lower specific coalconsumption to meet/exceed BEE
requirements. This can be achievedby reducing waste gas volume,
proper mixing of raw materials,
increasing the rates of reduction
reactions,andimportantly
performing outside certain amountof activities that the kiln currently
A 350 tpd coal based DRI plantdoes. It is about use ofunderstanding of rotary kiln operation and deploying technological developments in its
operations. One side effect of this approach is lower specific power generation. In fact, specificpower generation can be a good measure of the success of this approach.
The following paragraphs will illustrate on each of the above mentioned factors:
1. Getting to limits of the fill factor and throughput
The first question to ask is whether we are sure that the kiln is fully being used or not. If webenchmark with the airlines, one of their practices is to overbook to nullify the effect of lastminute cancellation and converting such revenues into the incremental profits of the airline.
Can the rotary kiln operations take this approach? When and how do we know that there is aroom to improve the filling factor? All of these questions are to be answered in a frame where
quality of DRI is not compromised.
The kiln processes are set and kept running at a particular level to ensure that the average
quality of DRI produced meets the minimum quality requirements. This is so done no matter
what the temperature inside is or what quality of iron ore allows as an opportunity. The RPM
is set also to deliver quality on an average. RPM is an important tool in the hands of theoperator. RPM also influences to what extent throughput can be increased.

The other factors for influencing throughput of the kiln are the closeness of particle size of thefeedstock of iron ore and non-coking coal. It explains why
kilns using pellets give higher throughput compared to kilns
using iron ore. Reduced fines and uniform size together
create a condition that allows kilns to be filled more andfaster. Arguably, iron ore feeds can achieve equally highthroughput, if the iron ore is good instrength and more uniform in size.
Presence of fines and mixed sizing causes Pellets typically used in DRI plants
reduction in the active layer volume. This layer is responsible for heat and mass transfer in thesolid bed. Accordingly, multiple kilns of the same size shall have multiple volumes of active
zone and therefore shall have different production levels. The trick to higher throughput lies inenlarging the active layer volume. The larger the volume, the faster is the heat transfer. In
other words, less is the temperature differential between the free space and the solid bed. For
the same refractory lining, one raises the solid bed temperatures and rates of direct reduction
which lead to higher production.
Another factor that influences the active layer volume is the right RPM. Higher or the active
layer volume reduces if the rolling of particles does not happen in the kiln. And rolling ofparticles depends on RPM and the angle of repose of the particles/mix of the particles.
Presence of fines changes the angle of repose and the pattern of rolling. Instances of suddenchange in pattern of metallization of lumpy particles and fines, is explained by this internal
phenomenon.
If the kiln is filled up by irrelevant particles, the effective volume for the relevant particles
drops as much and it will impair the effort to produce more. Irrelevant materials are ash incoal, or clay or such fines coming with iron ore, impurities in a low grade dolomite etc.
In fact, one can stretch the thinking and say that coal that only provides heat and does notparticipate in solid -solid reactions also
should stay away. So reduction of C/Fe also
is like creating more operating kiln volume.
The above can be summarized that one
should fill the kiln more/fast with C & Fe andhave a large active layer volume to gethigher throughput without sacrificing thequality of the DRI.
The feed system

2. Reduction in waste gas volume
The waste gas volume passing through the free space in the kiln creates a certain velocity.
Higher the volume, higher is the velocity for the same composition of waste gas and given
filling factor. As the filling factor improves, the free space shrinks and waste gas velocity goesup. The velocity helps in heat and mass transfer rates. So there is a need for a minimum
velocity. However, if the gas velocity goes very high as it will with higher filling factor, the COsurrounding the iron ore particle is swept away faster. Higher velocity will cause a tendency ofback mixing, effectively reducing useful volume of the kiln. There is an optimum point.
One of the ways to move the velocity point in the favorable direction is to reduce the gas
volume by proper design. Reducing excess air is one way and introducing oxygen in place of
air is another way.
3. Rates of reduction reactions
Higher the temperature, higher are the reaction rates for carbon consumption to generateheat and also for carbon monoxide to react with iron ore. Higher the reaction rates, the lower
is the requirement of residence time and higher is the possibility of increasing throughput. A
25 degree change in temperature, using suitable refractory, without increasing the thicknessof the refractory can enhance the reaction rates by 6%.
One way to maintain average temperatures high without taking the peak temperature up, is to
reduce instances of drop in temperature or change the shape of temperature to length curve,
and thus increase the average temperature. The main causes for a drop in averagetemperature are low temperature inputs like coal, iron ore, and even air. Preheating anddrying of input materials, primary air etc. would lift the average temperatures.

4. Mixing of contents
This is about setting proper RPM of the kiln. Without rotations of the kiln, there would be no
mixing. With low RPM, there will be slipping. With high RPM, there would be kind ofcentrifuging. Right RPM would lead to big active layer of rolling particles in the kiln, getting
heated and resulting faster reduction reaction.
Mixing also gets decided by the presence of fines in the material mix. Fines have a different
angle of repose than the solids and will interfere in the formation of active zone. Fines canlead to a formation of " kidney" which can be detected by unreduced fines.
New developments of rotary kilns use lifters to cause proper mixing and heat transfer. The
reported data suggests over 40% improvements in all parameters, such as production rate,
specific heat consumption etc.
5. Getting some of the " kiln work " done outside the kiln
This is the best chance to take a quantum jump in production level. Some of the plants havebeen operating with a preheating kiln, bringing iron ore at over 800 deg Celsius. For a 100 TPDkiln, this alone has taken the production to 150 TPD. A 350 TPD kiln can simply go to 500 TPD
production level by just one action.
Next course of action is preheating primary air and coal injection. In fact, wherever coal
injection is used, it is always preheated. Both the air and coal are usually preheated by waste
gas, or by external indirect heating. Even if the preheating process takes external heat andextra energy in terms of the pressure drop; the additional cost would not only pay for itself but
would also return well by shear release of kiln space and raising kiln productivity.
6. More on gas injection in the kiln
Even a better option could be to gasify the injection coal, partially and inject heated coal gas
inside the kiln. One would release even more space inside the kiln for direct reduction. The gas
will burn inside the kiln in competition to the coal and provide the required heat/temperature.
In a typical coal injection act, nearly 50 percent of the coal is injected. The injected coal needs
to be 3 to 6 mm in size. More often in Indian kilns, the entire minus 6 mm coal is injected.

This coal has about 40% fines of the size minus 3 mm. The zero fines would readily burn away
like gas would. The rest coal will drop on the active layer and cause disturbances. A lot of thiscoal comes out as unburnt in the formof char and ash. If we examine the coal
injection and the role it performs in the
DRI production, it looks possible that allthese roles can be better played by gas.
The following are the advantage of gas
injection:

1. The zero fines are substituted by gas, the ash carryover will get reduced.
2. The undersize fraction that is supposed to supplement carbon, could serve the role but
would disturb the active layer process. The gas as its substitute, with injection burners
directed towards the bed would do what coal would have done without any
disturbance.
3. The flame length can be adjusted more easily, if gas is injected.
When gas is injected, coal could be made to participate more in carbon solution reaction ascompared to the case where there is no gas injection. The gas injection burners could also be
directed towards rolling active layer for better heat transfer.
Now the question arises as to what should be the calorific value of the gas? The higher calorificvalue of the gas is a better option to avoid ingress of avoidable inerts that would reduce thepartial pressure of the reactant gases. It should have more carbon than hydrogen, or asufficiently high C/H ratio.
7. Effect on coal consumption on power production
With many of the above actions, the overall coal consumption ( or C/Fe ratio ) may drop due
to energy efficient marginal production. The C/Fe could be broken up as C/Fe in the kiln and
C/Fe outside the kiln. There would be more drop in C/Fe kiln, for actually performing somecoal consumption outside the kiln.

Since the whole exercise is about reducing specific fuel consumption, there would be
associated reduction in specific waste heat generation, but with associated increase in DRI
production, there would be no reduction in power production.

DRI manufacturing & Power generation flow diagram

To summarize, the efficient way of production of DRI with reduction in the carbon footprints and increase in productivity is desirable from the national perspectives toaugment the steel production in the country to meet it’s fast growing demand.

*************

Fuelling Iron making, Present and Future
Todd M. Astoria, P.E.
Midrex Technologies, Inc.
3735 Glenn Lake Drive, Suite 400, NC, USA 28208
Phone: +1 704-423-3369
Email: tastoria@midrex.com

INTRODUCTION

Natural Gas has fuelled the growth of DRI plants and will continue to be an important driver for Direct Reduction
Ironmaking growth in the future; however, many iron and steel producing regions are facing limitations on theavailability of natural gas, and/or increasing natural gas prices. On the conventional BF-BOF route there is increasingpressure on the supply of coking coal of sufficient quality that is required by the modern-day blast furnace. This paper
will review some of the current trends and options for fuelling the Midrex® Process with special emphasis on the Indian
market scenario.

A BRIEF COMPARISON OF THE CURRENT ART
Figure 1 lists the worldwide crude steel production by process route:

Percent of Total Production

Crude Steel Production by Process Route
100%
80%

26%
57%

60%
40%

74%
43%

20%
0%
World Wide
Oxygen Blown Converter

India
Electric Furnace

Figure 1: Crude Steel Production by Process Route 1

Figure 1 shows that the Oxygen Blown Converter (OBC) and Electric Furnace (EF) account for over 99% of the total
worldwide steel production. The charge material for the two routes varies by region; however, generally the OBC feed
mix is heavily dominated by Hot Metal from the blast furnace (BF), and the EF feed mix is heavily dominated by scrap
with a significant fraction composed of alternate iron units such as Direct Reduced Iron (DRI).

1

Source: World Steel Association, Steel Statistical Yearbook 2017

Figure 2 shows additional analysis related to the EF route:

450

90

400

80

350

70

300

60
2013

2014

2015

2016

Year
CS from EF

DRI Production

I Production (million tons / year)

rude Steel from EF (million tons /year)World: Crude Steel from Electric Furnace
and DRI Production

Figure 2: World EF Crude Steel and DRI Production Comparison 2, 3

Figure 2 shows that the total crude steel produced by the electric furnace route is in the range of 400 to 420 million tons
over the last several years. Correspondingly, this implies that DRI comprises approximately 15% to 18% of theworldwide EF charge mix 4.
Figure 3 shows the specifics for the Indian scenario:

Million Tons / year

Indian Scenario: Crude Steel from Electric
Furnace and DRI Production
60
40
20
0
2013

2014

2015

2016

Year
CS from EF

DRI Production

Figure 3: Indian Scenario: CS from EF and DRI Production 5, 6

Figure 3 indicates that for the Indian scenario, DRI comprises over 25%7of the charge in electric furnaces. Figure 2
already shows that the worldwide average is 15% to 18% which is significantly lower than the percentage from theIndian scenario.

2

Source for CS Production: World Steel Association, Steel Statistical Yearbook 2017
Source for DRI Production: Midrex World Direct Reduction Statistics 2017
4
Considering 2016 production numbers with 85% conversion of DRI to CS and 90% conversion of scrap to CS
5
Source for CS Production: World Steel Association, Steel Statistical Yearbook 2017
6
Source for DRI Production: Midrex World Direct Reduction Statistics 20173

The Indian scenario also has a distinct difference in the DRI process route compared to the world trend, and it can beseen in Figure 4:

Production by Process Route (%)

DRI Production by Process Route
100%

82%

80%

69%

60%
31%

40%
18%

20%
0%

Worldwide
Gas Based

Indian Scenario
Coal Based

Figure 4: DRI Production by Process Route 7

Figure 4 shows that the Indian scenario DRI production is heavily dominated by the coal based route. In 2017 India
produced approximately 22 million tons of DRI, and about 7 million of those tons were produced by gas based DRI
technology. The Indian coal based DRI production accounts for virtually all the worldwide coal based DRI production.
The current state of the market can be summarized that the BF/BOF combination continues to be the dominant
steelmaking process route followed by the electric furnace technologies. Worldwide DRI is a small but growing portionof the metallics balance and is mostly using gas-based technologies.
The Indian scenario contrasts with the world trend in that the EF route is adopted at a higher rate and coal-based DRI
production is favoured over gas-based DRI. The availability of fuel is one of the key considerations driving the Indian
market and factors heavily into the following discussion.

FUEL FOR THE MIDREX® PROCESSThis paper will not go into the details of ironmaking fundamentals since it is assumed that the audience already has
expertise in the field of ironmaking and steelmaking. For the convenience of this discussion, it will be assumed thatwhen discussing the various process routes the predominate fuels are identified in Table 1:
Table 1: Predominant Fuels of for Iron and Steelmaking
Ironmaking Route

Fuel Options

Blast Furnace

Coking Coal (dominant)Non-coking coal
Natural Gas
Coal (gasification-based technologies)
Coal

Gas-based Direct Reduced Iron
Coal-based Direct Reduced Iron

7

Source: Source for DRI Production: Midrex World Direct Reduction Statistics 2017 for the 2017 year

Table 1 clearly indicates why the Indian scenario is different from the worldwide trend. Since 2007, India has increased
the crude steel production from approximately 53 million tons up to approximately 95 million tons in 2016 8. The major
steel companies have installed and upgraded significant new capacity for the blast furnace route. However, the fractionof crude steel produced by the electric furnace route in India has not significantly diminished even with the large added
blast furnace capacity, as can be seen in Figure 5:

80%

100
68%

70%

57%

60%
50%
40%

43%

57%

56%
42%

43%

57%
43%

95
90
85

32%

30%

80

20%
75

10%
0%

70
2012

2013

2014

2015

2016

Indian Total CS Production (million tons)

CS Production by Procss Route (%)

Growth of Indian Crude Steel Production

Year
OBC

EF

Indian CS Production

Figure 5: Growth of Indian Crude Steel Production 9

These statics lead to the conclusion that the availability and price of fuel in the Indian scenario will drive production andtechnology decisions for iron and steelmaking. Most importantly, coking coal and natural gas currently have lessavailability. Therefore, for the Indian scenario it is mandatory to maximize the use of non-coking coal or anotherplentiful fuel resource.

Figure 6 shows the fuel flexibility for the Midrex® Process:89Source: World Steel Association, Steel Statistical Yearbook 2017
Source: World Steel Association, Steel Statistical Yearbook 2017

Figure 6: Midrex(R) Process Fuel Flexibility

The two fuels of interest from Figure 6 are natural gas and coal. The previous section has noted that natural gas itself
has the supply limitation for iron production; however, the critical and desired component of natural gas that is requiredby the Midrex® Process is methane.
One important development on the international market is the return of gas-based production of DRI to the USA. From1970 to 1997 the USA had a combined total DRI production of about 10 million tons of DRI 10. Then from 2001 until
2013, there was negligible or no DRI production. However, after the introduction of hydraulic fracturing technology to
produce natural gas the market condition was changed. As of 2017, there are multiple DRI plants in operation in the
USA producing roughly 3 million tons of DRI. There is also an additional natural gas-based DRI facility is underconstruction in the USA and expected to start up as soon as 2020.
The USA condition is an important analogy to the Indian scenario due to Coal Bed Methane (CBM). The estimated Indian
CBM resources are around 2,600 billion cubic meters (92 trillion cubic feet) 11. In 2016, the USA had an estimated shalegas resource of 210 trillion cubic feet 12.

10

Source Midrex World Direct Reduction Statistics 2017
Source Government of India, Ministry of Petroleum and Natural Gas 2017-2018 Annual Report
12
Source Department of Energy, US Energy Information Administration
11

The Orissa and West Bengal area have estimated CBM reserves of 460 billion cubic meters 13. CBM is a direct
substitution of natural gas in the Midrex® process, and if these resources are developed, then gas-based DRI may
become a viable option in the future.
However, for India the current abundant resource is non-coking coal. The Indian reserve of non-coking coal is 279 billion
tons 14. Midrex has continued to work with our partners to further develop and define the MXOCL® Plant. The MXCOL®
Plant is designed specifically for Grade E and Grade F coal for high efficiency and cost-effective production of DRI.

Direct Reduced Iron Future Fuels

There are some additional fuel developments that should also be mentioned. In the short and midterm, coal and natural
gas will continue to be the driving factors. However, some international market segments are starting to see additionalpressures that are driving research into alternate fuels.
In Europe, the OBC route is still favoured over the EF route. Approximately 60% of the crude steel produced in theEuropean Union (EU) in 2016 was produced through the OBC route. However, the EU steelmaking industry is starting toface environmental and financial pressure to drastically reduce their CO2 emissions. Since the BF / BOF route producesmuch more CO2 than the DRI / EF route there is starting to be additional study and interest in evaluating the DRI / EFroute.
However, according to the EU targets, simply adopting the DRI / EF route reduce the CO2 emission sufficiently by theirown, so there is increasing interest in even lower CO2 emission ironmaking technologies.
One advanced ironmaking technology option is Midrex® H2. The flowsheet is shown in Figure 7.

Figure 7: Midrex(R) H2 Flowsheet

13
14

Source Government of India, Ministry of Petroleum and Natural Gas 2017-2018 Annual Report
Source Government of India, Ministry of Coal 2017-2018 Annual ReportIf the hydrogen is produced from a ‘green’ source, then the CO2 emission from the DR Plant can be drastically reduced.
In commercial operation, the Midrex® Process is already operating with H2 concentrations of at least 55% and up to
approximately 70%. Because hydrogen is already used in large amounts in the Midrex® Plant the technology risk isgreatly reduced if industrial quantities of green energy can be produced.

*************

TitleGlobal Scrap and DRI Outlook
Shruti Salwan
Metals Analyst, Metal Bulletin Research
4th India International DRI Summit 2018
13 August 2018, Delhi

Disclaimer:• Prices and other information contained in this presentation have been obtained by us from various sources believed to be reliable. This information has
not been independently verified by us. Those prices and price indices that are evaluated or calculated by us represent an approximate evaluation ofcurrent levels based upon dealings (if any) that may have been disclosed prior to publication to us. Such prices are collated through regular contact withproducers, traders, dealers, brokers and purchasers although not all market segments may be contacted prior to the evaluation, calculation, or publicationof any specific price or index. Actual transaction prices will reflect quantities, grades and qualities, credit terms, and many other parameters. The prices
are in no sense comparable to the quoted prices of commodities in which a formal futures market exists.
• Evaluations or calculations of prices and price indices by us are based upon certain market assumptions and evaluation methodologies, and may notconform to prices or information available from third parties. There may be errors or defects in such assumptions or methodologies that cause resultant
evaluations to be inappropriate for use. Your use or reliance on any prices or other information published by us is at your sole risk. Neither we nor any ofour providers of information make any representations or warranties, express or implied as to the accuracy, completeness or reliability of any advice,
opinion, statement or other information forming any part of the published information or its fitness or suitability for a particular purpose or use. Neither
we, nor any of our officers, employees or representatives shall be liable to any person for any losses or damages incurred, suffered or arising as a result ofuse or reliance on the prices or other information contained in this publication, howsoever arising, including but not limited to any direct, indirect,
consequential, punitive, incidental, special or similar damage, losses or expenses.

Title• We are not an investment advisor, a financial advisor or a securities broker. The information published has been prepared solely for informational andeducational purposes and is not intended for trading purposes or to address your particular requirements. The information provided is not an offer to buy
or sell or a solicitation of an offer to buy or sell any security, commodity, financial product, instrument or other investment or to participate in any
particular trading strategy. Such information is intended to be available for your general information and is not intended to be relied upon by users inmaking (or refraining from making) any specific investment or other decisions. Your investment actions should be solely based upon your own decisions
and research and appropriate independent advice should be obtained from a suitably qualified independent advisor before making any such decision.

Global Scrap & DRI Outlook
Demand for scrap has been growing

Title• Rising crude steel output with an emphasis on EAF• Environmental aspirations in key consuming markets

Global steel production will continue to grow at a steady pace with MBR
forecast suggesting growth at a CAGR of 2.1% by 2030
2500

Global Crude Steel Production

Title

1000
500
0

Source: WSA, Metal Bulletin Research

4%
2%
0%
-2%
-4%

Y-o-Y (%)

Volume in Kt ('000)

8%
6%

2000
1500

Y/Y % Change

EAF steel production route is gaining prominence but the gamechanging evolution from BOF to EAF in China is yet to happen…
Voulme in Kt ('000)

2000

EAF:BOF Ratio

EAF

0.36

BOF

0.355

1500

0.35

Title

1000

0.345
0.34
0.335

500

0.33

0

0.325
2013

2014

2015

2016

2017

Source: WSA, Metal Bulletin Research

Demand from key ferrous scrap consuming markets is accelerating…
30%
20%
10%

Title

0%
-10%
-20%

2014
US

Germany

Source: Metal Bulletin Research

2015
Italy

Turkey2016
Japan

Russia2017
China

South Korea

Global Scrap & DRI Outlook
Scrap remains comparatively low priced

Title• Scrap underperformed compared to other raw materials• Margins at steel mills hit record highs• Melting scrap is more appealing than re-rolling

Last year, domestic scrap prices in China remained relatively low
against hot metal costs which prompted demand for scrap –whether the trend will continue is a big question?
Premium

390
345

Domestic Scrap

180
135

Title

90

255

45

210

0

165

-45

120

-90

Jan-16

Jul-16

Source: Metal Bulletin, Metal Bulletin ResearchJan-17

Jul-17Jan-18

Jul-18

$/t

$/t

300

Hot Metal Proxy

HRC-scrap spreads widened after a massive push in US steel prices to unsustainable
700
600
500
400
300
200
100
0

US HRC/Busheling

Title

Germany HRC/E8

Mar 18

Sep 17

Mar 17

Sep 16

Mar 16

Sep 15

Mar 15

Sep 14

Mar 14

Sep 13

Mar 13

Sep 12

Mar 12

Sep 11

Italy HRC/E8

Mar 11$/tonnelevels; European domestic demand remains sluggish compared to last year; Turkish spreads
remain above the long-term average of $200/tonne

Turkey HRC/ Shredded

Source: Metal Bulletin, AMM, Metal Bulletin Research

Rebar-scrap spreads to break the record of previous highs as global trade protectionism
pushes domestic regional prices in the US & EU up; growth in China's construction sector
remains positive; while duties/currency deflation pushes Turkish prices
500

US Rebar/Shredded

400

Title

Germany Rebar/E40

200

Eastern China
Rebar/Heavy Melt
Scrap

Source: Metal Bulletin, AMM, Metal Bulletin Research

Mar…

Sep 17

Mar…

Sep 16

Mar…

Sep 15

Mar…

Sep 14

Mar…

Sep 13

Mar…

Sep 12

Mar…

0

Sep 11

100

Mar…

$/tonne300

Turkey Rebar/HMS

Turkish market is a good illustration of slower growth in scrap prices
making them more attractive against semi-finished steel products
Scrap

Q1 -…

Q4 -…

Q3 -…

Q2 -…

Q1 -…

Q4 -…

Q3 -…

Q2 -…

Q1 -…

Q4 -…

Q3 -…

Q2 -…

Q1 -…

Q4 -…

Q3 -…

Q2 -…

Title

Q1 -…

7
6
5
4
3
2
1
0

Scrap (HMS 80:20 mix) [RHS]

Source: TUiK, Metal Bulletin Research

Global Scrap & DRI Outlook
What keeps scrap prices suppressed?

Title• Surged graphite electrode prices• Abundant ferrous scrap supply• Competition in scrap and iron metallics market

Billet + Slab
600
500
400
300
200
100
0

$/tonneMt

Average (CIS billet+slab) [RHS]

Increase in graphite electrode prices has been leaving little room forscrap prices to rise

$ per tonne

Rebar fob Turkey
Scrap cfr Turkey

Electrodes cost100%
Scrap + electrodes share [RHS]
80%

Title

60%
40%

% of rebar price

800
700
600
500
400
300
200
100
0

20%
0%
Q1-10 Q1-11 Q1-12 Q1-13 Q1-14 Q1-15 Q1-16 Q1-17 Q1-18

Source: Metal Bulletin, Metal Bulletin Research, MBR Cost Service

In fact, when graphite electrode prices in spot market spiked to $30,000
per tonne, potential rise in scrap prices was restricted
600
500
400
300

Title Potential scrap price rise prevented by the electrode price jump

200
100
0
Average scrap price & electrodes cost(contract and spot) in Q3-17
Source: Metal Bulletin Research, MBR Cost Service

When electrode spot price spiked to$30k/t in Q3-17

Electrodes
cost, $ per
tonne of steel
produced
HMS 1&2(80:20) price, $per tonne cfr
TurkeyRebar price, $per tonne fob
Turkey180,000
160,000
140,000
120,000
100,000
80,00060,00040,00020,000
0

0.1
0.08
0.06
0.04
0.02
0
-0.02
-0.04
-0.06
-0.08

Title

Source: Metal Bulletin Research

RussiaY-o-Y % change

Volume in tonnes (‘000)

Scrap sales as an indicator of supply volumes accelerated last year in key
markets

2010 2011 2012 2013 2014 2015 2016 2017

Japan
Germany
UK
US
Global [RHS]

DRI/HBI is rapidly winning market share globally, major HBI exporters
increased their combined exports last year and the trend is likely to continue
940%

Middle East

8

30%

India

20%

Malaysia

6
5
4

Title

10%
0%

3

-10%

2
1

-20%

0

-30%
2010 2011 2012 2013 2014 2015 2016 2017

Source: ISSB, Metal Bulletin Research

year on year

Exports, Mt

7

USVenezuela
TrinidadRussiaCombined HBI change[RHS]

Major importers are seeing ramping up HBI purchases at a higher pacethan MPI
1860%

HBI (Turkey)

16

50%

HBI (US)

14
10

30%
20%

8

10%

6

0%

4

-10%

2

-20%

0

-30%
2010 2011 2012 2013 2014 2015 2016 2017

year on year

Imports, Mt

40%

Title

12

HBI (EU)
Pig iron (Turkey)
Pig iron (US)Pig iron (EU)
Combined HBI change[RHS]
Combined pig ironchange [RHS]

Source: ISSB, Metal Bulletin Research

So pig iron premiums over scrap have slid
180

US (Alabama busheling #1)

150

$/T

120
90
60

Title

30
0
-30

Source: Metal Bulletin, AMM, Metal Bulletin Research

Italy (E8)Germany (E8)Global Scrap & DRI Outlook
What is the relevance to Indian steel market?

Title• Raw material demand set to grow for both scrap and metallics• Greater reliance on scrap imports is anticipated

Rising steel output in India needs adequate supply of raw material
which remains a challenge to source domestically…
200

Mt

150
125
100

FY 2030-31 plan

Title

75

53

50
25

179

FY 2016-17 fact

175

33
12

64

28

0
Ferrous scrap use Sponge iron/DRI use Hot metal/MPI use
Source: Ministry of Steel (India), Metal Bulletin Research• Scrap demand in India is
projected to rise to almost 33Mt
by 2030-31• Requirements for DRI, known assponge iron in India, will exceed
52.5Mt by FY2030-31• Domestic industry still heavily
relies on imports for coking coal
which increased by 13% y/y in2017/2018

Local shredding capacity will not prevent a rise in India scrap import
volumes30

Scrap imports
Sales of local shredded

Sales of local cut grades
Imports share [RHS]• First legal car shredding
operation to begin next year

40%

30%

• 1 million tonnes of shredded
scrap expected to be produced
by 2023 domestically

10

20%

• Nevertheless, scrap imports
are unlikely to be impacted

0

10%

Title

Mt

20

2017

2023f

• MBR calculations suggest thatimports are expected to reach
7.37 million tonnes in 2023

Source: ISSB, CERO, Metal Bulletin Research

Global Scrap & DRI Outlook
Growth projections for the Indian steel market

Title• Prevailing market scenario• Comparison to growth in China and Globally• Downstream demandIndian Steel Industry: On An Upswing
120
100

16%
14%
12%

Title

10%

MT

80

Consumption
Production
Percentage Change, Production [RHS]
Percentage Change, Consumption [RHS]60• Rise in domestic finished steel
consumption against crude
production figures• Pace of growth have slightly
slowed in 2017

8%
6%

40

4%

20

2%

0

0%
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

• Increased domestic supply toseek improved consumption
rates else exports will surge• Weaker global steel demand
to be a concern

Source: JPC, Ministry of Steel, Metal Bulletin Research *Note: Data based on Indian FY i.e. April 17-March 18

Growth patterns in global crude steel production to be dominated by
China. While China aims to control its steel glut, India sets in its ways…
20%

Global

15%
10%

Title

5%
0%
-5%
-10%
Source: WSA, Metal Bulletin Research

CHINA

INDIA

Although demand from downstream markets remains supportive, pace ofgrowth is relatively slow when compared to steel output
End-market Index (2010=100)

2000

Construction

1500
1000

Industrial production(ex. Construction)

Title

Motor vehicles

500
Domestic appliances0
Manufacturing

Source: Metal Bulletin Research

180
160
140
120
100
80
60
40
20
0

Per capita consumption [RHS]
Source: Metal Bulletin Research

2029

2027

2025

2023

2021

2019

2017

2015

2013

2011

2009

Title

2007

1600
1400
1200
1000
800
600
400
200
0

Population

per capita in kgs

Millions

Population is expected to grow by circa 1% annually however per capita
consumption needs to more than double to hit the 158kgs mark by 2030
• Per capita consumption iscurrently hovering around
68kgs while global average
stands at 235kgs• Rural areas to offer morepotential to improvise percapita steel consumption
rates• MBR calculations suggest a
CAGR of 6.7% for next 14
years to meet the markKey Takeaways• In India, demand for both metallics and scrap will benefit from the rising steel output
provided capacity expansion plans come to life
• Import scrap volumes are also set to increase, at least over the next five years, despite
the launch of local shredding capacities by 2023
• While Indian steel industry offers ample potential for growth, limited accessibility to raw
materials and lack of investor-friendly downstream projects harbour significant downsiderisks• Globally, DRI/HBI is winning market share, adding to abundant supply of scrap andmetallics, and the trend will persist with new capacity coming on stream• Ferrous scrap prices theoretically have potential to increase, eating into the elevatedmargins at steel mills, but restraining factors will stay in place

Title

ALONA YUNDA

Meet The Team

Alona Yunda, senior metals analyst, leading global ferrous scrap & iron metallics market analysis and short-term forecasts at Metal Bulletin Research.
Prior to joining the team in September 2017, for four years covered metallics and a wide range of semi- and finished steel products on the editorial side
as a reporter in the CIS, Turkey and Mena team and then as an editor in the European steel team of Metal Bulletin in London. Before that, worked at
Metal Expert in Ukraine for two years, overlooking East Asian steel markets, as well as providing analysis on iron ore prices in China. Obtained amaster’s degree in economics at the National Mining University in Dnepr, Ukraine.

EMAIL: alona.yunda@metalbulletin.com | TELEPHONE: +44 (0) 2075566022

LEE ALLEN

Title

Lee Allen is a Metals Analyst at Metal Bulletin Research (MBR), responsible for covering ferrous scrap and long steel markets. Lee regularly
contributes research to MBR’s weekly raw materials and steel market trackers, providing analysis of recent market trends and priceforecasts. Prior to becoming an analyst, Lee spent two years as a reporter for Metal Bulletin, assessing prices for Indian import ferrous scrap
and UK domestic ferrous scrap among other products. He holds a bachelor’s degree in French and Politics from the University of Bath, andspeaks both French and German fluently.

EMAIL: lee.allen@metalbulletin.com | TELEPHONE: +44 (0) 2078276475

SHRUTI SALWAN
Shruti Salwan is a Metals Analyst with Metal Bulletin’s steel & steel raw material research wing providing essential market and analytical insight onferro-alloys and steel long products. She has expertise in providing industrial and economic analysis, price forecasts, and fundamentals around supplydemand dynamics across different commodities. Besides being a principal contributor in researching and generating reports for several bespoke
consultancy projects, Shruti has also represented Metal Bulletin at several influential industry events around the world. She holds master’s degree inbusiness administration from Institute of Management Technology, India.

EMAIL: ssalwan@metalbulletinresearch.com | TELEPHONE: +44 (0) 2078276424

Why Metal Bulletin Research?
Long and short-term forecast services for the global metals & mining industry
Steel

Title

Steel Raw
Materials

Non-ferrous

Ores & Alloys

Tube & Pipe

Access independent, accurate forecasts based on 1,500+ trusted prices from
Metal Bulletin and American Metal Market
Understand your industry with specialist analysis of market developments
and underlying fundamentals
Plan ahead with confidence using valuable and reliable strategic insight

Steel Scrap & Metallics Market Tracker
Comprehensive, independent analysis and forecasts for the ferrous scrap markets

Title

 Forecasts for over 54 steel scrap and metallic prices
 Regular, independent analysis including
supply/demand, international trade and freight data

 Direct access to the experienced, specialist team
Request a sample of the service: info@metalbulletinresearch.com

Steel Raw Materials Market Tracker
Complete, independent price forecasting and analysis for steel raw materials

Title 12 month forecasts for 57 different steel raw
material prices
 Supply/demand & other market analysis

 Direct access to a specialist team
 Accurate price forecasts (over 99% for coking
coal and over 98% for iron ore in Q2 2018)

Request a sample of the service: info@metalbulletinresearch.com**********

Highlights of the 4th India International DRI Summit, 2018
Sponge Iron Manufacturers Association (SIMA) is a 26 years old all India apex industry body created to promote DRI
and DRI based steel plants. They organized 4th India International DRI Summit 2018 on 13th August, 2018 at New Delhi. This event of national importance was attended by Union Steel Minister, Member, NITI Aayog, Secretary, Ministryof Steel, Chairman, SAIL, Chairman, JSPL, Jt. MD & CFO, JSW, experts from USA, UK ,Austria, China, UAE, captains ofIndian steel industry, raw material and technology suppliers etc.

Glimpses of the event
Inaugural Session

L to R ) Mr.Deependra Kashiva, Executive Director,SIMA, Mr.D.P. Deshpande, Chairman,SIMA, Dr. Aruna
Sharma, Former Secretary (Steel), Chaudhary Birender Singh, Union Minister of Steel, Dr. V.K. Saraswat,
Member, NITI Aayog,Mr. Naveen Jindal, Chairman,JSPL, Mr.Prakash Tatia, Director, Welspun Steel Ltd.

In his theme address Mr. Deependra Kashiva, Executive Director ,SIMA gave a over view of the summit and current
steel and DRI scenario . He also flagged the issue of non availability of major raw materials at a affordable price.

Chaudhary Birender Singh, Union Steel Minister in his address as a Chief Guest stated that domestic steel
consumption is growing rapidly and likely to grow 10/12% more in next 2-3 years.

Dr. Aruna Sharma, Former Secretary (Steel) in her address as a Guest of Honour highlighted the raw material issues
and stated that the issues have been flagged to the concerned ministries and new mining policy is under process
which will be presented to union cabinet shortly.

Dr. V.K. Saraswat, Member, NITI Aayog in his address as a Guest of Honour stated that Indian steel consumption has
shown an impressive growth from 60kg per capita to 68kg per capita but we have a long way to go to achieve theworld average per capita consumption. Indian DRI has a great future prospects and we need a steel policy where
every milestone of steel production to be monitored and be competitive.

Mr. Naveen Jindal, Chairman, Jindal Steel & Power Ltd. also raised the issue of consistent availability of iron ore andcoal at affordable prices .

Dignitaries releasing the KPMG report on “Assessment of Future Potential of Sponge Iron Industry in India”.

Session – I - CEO Panel Discussion - Capacity Creation of Steel and Challenges(L to R) Mr. Seshagiri Rao, Jt.MD & Group CFO,JSW Steel, Chaudhary Birender Singh,Minister of Steel, Mr.Nigel D’souza,Chief
Analyst(metal) CNBC, (Moderator) Mr. Saraswati Prasad,Special Secretary & FA,MoS and Chairman,SAIL and Mr. A.K.
Saxena,Executive Director,Bhushan Steel

Session-II -Technical Advances in DRI & DRI based Steel Production(L to R ) Mr.Todd M.Astoria,GM,Research & Technology Dev.,Midrex,USA, Mr.Partha Sengupta,President Corp.Services, JSW Steel(Moderator), Mr. Christian Boehm,Primetals Technologies,Austria and Mr. Anuj Agarwal, GM (Mktg) GAIL

Session-III – Metallics Scenario( L to R) Mr. MV Subba Rao,CMD, KIOCL Ltd, on podium, Ms.Shruti Salwan,Metal Analyst,Metal Bulletin,UK, Mr. Prakash
Tatia,Director,Welspun Steel (Moderator), Mr. Chris Barrington,Secretary General,IIMA, UK

Session-IV - Innovation in Coal Based DRI Production(L to R ) Mr. TANG En,Wuhan COSRED,China, Mr. DP Deshpande,Chairman,SIMA (Moderator), Mr.Vivek Garg,Head DRI
Business,JSPL, Dr.RR Sonde, Executive Vice President,Thermax Ltd.

Sesion-V - Challenges and Prospects of DRI and DRI Based Steel Production( L to R ) Mr. Juan Cairo,DRI Tech.Support Manager, Manoir Pitres,France, Mr. J.Satyanarana,Director,Ferrexpo Middle East Fze,UAE,
Mr. Deependra Kashiva,Executive Director, SIMA (Moderator) Ms. Aditi Trafdar,Technical Director,M.N.Dastur & Co., Mr. Pranay
Shukla,Senior Ayalyst, Mercuria Trading (I)Pvt.Ltd.

*************

Congratulations our esteemed members for receiving Secondary
Steel Sector Award 2016-17

M/S SMC Power Generation Ltd. was given Golden Award and a Certificate by Union Minister of Steel under
the category Direct Reduction Iron – Electric Arc Furnace/induction Furnace-RM . Award was received by
Mr. M. C. Aggarwal, Mr. C.P. Aggarwal & Mr. Akshay Aggarwal

M/S Shri Bajrang Power & Ispat Ltd. was given Golden Award and a Certificate by Union Minister of Steelunder the category Direct Reduction Iron – Electric Arc Furnace/induction Furnace-RM . Award was received
by Mr. Narendra Goel and Mr. S.K. Goyal.

Congratulations our esteemed members for receiving Secondary
Steel Sector Award 2016-17

M/S Sunflag Iron & Steel Co. Ltd. was given Golden Award and a Certificate by Union Minister of Steel under
the category Mini blast furnace (with or without DRI) – EAF/EOF with/without RM. Award was received by
Mr. Jagannathan Somu.

M/S Pulkit Metals Ltd was given Silver Award andCertificate under the category EAF/IF-RM from ,Union Minister of Steel . Award was received by
Mr. Puushpit Garg

Congratulations our esteemed member – M/s Suraj Products Ltd. forreceiving Pollution Control Appreciation Award 2018 from State
Pollution Control Board, Odisha---------------------------------------------------------------------------------------------------------------------------------------------

Congratulations

Congratulations

Congratulations

JSW Steel Limited
andMinera Steel & power Pvt. Ltd.
For Getting Captive Iron Ore Mines
In the State of Karnataka***************