Iran, the 2nd largest DRI producer in the world and largest in the Middle East, has large scale DRI expansion plans owing to ample availability of natural gas at cheaper rates. The gas based DRI plants use 100% DR grade pellets, which is their basic raw material for steel making.
In FY15, of the total pellet exported from India, 70% (0.57 mnt via 11 shipments) was shipped to Iran. Essar Steel was the largest exporter at 0.46 mnt via 9 shipments. Pellet imports are quite costlier from countries other than India and also have a longer delivery time.
Taking into consideration the total DRI and pellet capacity (current & expected) of 30.6 mnt & 30.5 mnt respectively by 2016 end, Iran may have to import 13.9 mnt of pellet to match the total requirement. About 90% of pellets produced in Iran is used for captive purposes and the rest is sold domestically. With underutilized capacities in India, can Iran be a large potential market for Indian DR grade pellets?