Posted on 28 Oct 2020
Increasing DR-grade pellet demand should be met in full by the ramping up of output at existing pellet suppliers, as well as return of Samarco. However, a repeat of the supply disruptions seen in recent years cannot be ruled out, according to Dr. Joseph Poveromo of Raw Materials & Ironmaking Global Consulting.
Direct reduced iron production at plants using seaborne iron ore pellet will increase by 16.5 million tonnes between 2018 and 2025, requiring an additional 23.9mt of ideally DR-grade pellet, Poveromo observed at last week’s Steel Times International webinar attended by Kallanish.
The majority of the world’s DRI producers enjoy captive supply of DR-grade pellets, such as those in India, Iran, Russia, Canada, Mexico and Venezuela. Others, however, such as those in the Middle East and North Africa, USA, Argentina, Trinidad, and Southeast Asia, rely on seaborne pellet supply.
Brazil, Bahrain and Sweden exported 19.4mt, 9.8mt and 6.2mt respectively of DR-grade pellet in 2019, with Saudi Arabia, Egypt, United Arab Emirates and the US importing 8.7mt, 5.7mt, 5.5mt and 4.8mt respectively.
Recent years have seen numerous pellet supply disruptions, caused by Samarco suspending output in 2015, a strike at IOC causing 3mt of lost output in 2018, and LKAB’s Svappavaara plant seeing a four-month stoppage in 2018/19. Moreover, Anglo American’s Minas Rio operation shut down in March 2018 for pipeline repairs, reopening in the fourth quarter that year. This in turn also limited pellet feed supply to Bahrain Steel.
Output at DRI plants using seaborne pellet is seen at 45.3mt in 2025, requiring 64.7mt of pellet, versus 34.8mt and 49.4mt respectively in 2020. As for the alternatives to DR pellet usage, DR lump ore sources are very limited, while BF pellet can be used only in limited amounts as it results in higher EAF steelmaking costs due to added gangue.
Vale is expected to ramp up DR pellet supply by a further 6mt by 2025, with Samarco’s return providing an additional 8mt, and Bahrain Steel and Tosyali Algeria hiking supply 3.8mt and 3.9mt respectively. “So, we think that the market will get there,” Poveromo said.
Moreover, Metinvest Central-GOK’s pellet plant upgrade and future upgrades planned at Metalloinvest LGOK and MGOK should see increased pellet supply from Ukraine and Russia. Also, Baffinland Iron Mines’ Mary River mine is a potential new supplier of DR-grade lump ore.
On the topic of Cleveland-Cliffs supplying pellet to the seaborne market, Poveromo said the company’s limited production capacity would restrict availability. It is, however, in an ideal position to acquire the long-delayed Mesabi Metallics iron ore pellet project.
“But seaborne supply is still a challenge: getting pellets out of the Great Lakes, into the ocean market,” Poveromo said. “We estimate there’s a freight cost penalty of $20/tonne. It’s no problem in today’s high price market, but I think in a sustaining market that’s a big barrier to overcome.”
Source:Kallanish
