MEIS 2020: Oversupply possible for DR pellet market in mid-term

The global direct-reduced (DR) iron-ore pellet market - which has traditionally faced shortages - may face a material oversupply by 2025, Chris Barrington, chief advisor of the International Iron Metallics Association (IIMA), said during Fastmarkets' Middle East Iron and Steel virtual conference on Wednesday December 16.

"There will be significantly more than enough potential supply to meet demand [by 2025]," Barrington said. "However, I should emphasize the word 'potential' because suppliers will not produce pellets for which there is no demand, and they generally can switch between BF- [blast furnace] and DR-grade pellets or to sell fines in line with market demand and margin."
DR pellet demand is forecast to increase to 54.4 million tonnes in 2025, compared with 42.6 million tonnes in 2019, IIMA estimates. The additional 11.8 million tonnes of demand will come amid higher direct-reduced iron (DRI) production at existing assets and from a wave of upcoming DRI production projects, which will require seaborne iron ore feedstock, in China and Germany.

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