Direct Reduced Iron Market Size

Direct Reduced Iron Market Size

Direct Reduced Iron Market was valued at USD 67.8 billion in 2023 and is anticipated to register a CAGR of 9.1% between 2024 and 2032. The rapid market growth is credited to increasing urbanization, infrastructure development, and expanding manufacturing sectors.

The rise in steel consumption influences the Direct Reduced Iron (DRI) sector, driving it to a promising future. According to the World Steel Association, global steel demand was expected to reach 1.87 billion tons in 2023, up by 3.3% from 2022. This expansion is particularly seen in emerging countries, such as China and India, where urbanization and infrastructure development are fueling a construction boom.

 

The UN estimates that the world's population will reach a staggering 9.7 billion by 2050. This rapid growth will lead to increased demand for infrastructure, housing, and consumer goods, which rely significantly on steel. As populations grow, especially in emerging countries, urbanization accelerates. The World Bank predicts that by 2045, 68% of the global population will reside in urban areas. This fast urbanization will result in a boom in the construction of buildings, transit networks, and essential infrastructure, boosting the demand for direct reduced iron.
 

The direct reduced iron industry is facing significant challenges due to the fluctuating prices of its primary raw materials: iron ore and reducing agents such as coal or natural gas. This fluctuation considerably influences manufacturing costs, profitability, and overall market stability. Over the last decade, iron ore prices have fluctuated dramatically. In 2011, the Platts IODEX 62% CFR iron ore price hit a peak of over USD 190 per ton. However, two years later, the price dropped to under USD 80 per ton. The 58% decline demonstrates the possible severity of price variations. Prices of coal and natural gas, the primary reducing agents in DRI manufacturing, also show significant fluctuations. These raw material price changes present a difficult situation for DRI manufacturers. When prices rise, production costs increase, reducing profit margins. This can result in lower output or even plant shutdowns, affecting total DRI supply and price hikes.