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Direct Reduced Iron Market Size, Share & COVID-19 Impact Analysis, By Form (Pellets and Others), By Production Process (Gas-based and Coal-based), By Application (Steel Production, Construction, and Others), and Regional Forecast, 2022-2029

Region : Global | Format: PDF | Report ID: FBI107381



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The global direct reduced iron market size was valued at USD 29.80 billion in 2021. The market is projected to grow from USD 31.49 billion in 2022 to USD 57.57 billion by 2029, exhibiting a CAGR of 9.0% during the forecast period. The global COVID-19 pandemic has been unprecedented and staggering, with direct reduced iron experiencing lower-than-anticipated demand across all regions compared to pre-pandemic levels. Based on our analysis, the global market exhibited a decline of 1% in 2020 as compared to 2019.

Direct Reduced Iron (DRI) is iron ore in the form of pellets and lumps, also known as sponge iron. The overall process of reducing iron ore is the removal of oxygen from its ore or other ferrous substances in a solid state without melting, similar to that encountered in the blast furnace. The reducing agents are hydrogen and carbon monoxide, which comes from reformed coal, synthesis gas, and natural gas.

Additionally, steel production using Blast Furnace/Basic Oxygen Furnace (BF/BOF) processes is based on fossil fuels. The reducing gas is obtained from natural gas or coal, producing a large amount of CO2 emissions. Therefore, direct reduced iron companies in the market are increasing R&D capacities in hydrogen-based DRI production, which can be further processed into steel with an Electric Arc Furnace (EAF). Such factors are expected to boost the direct reduced iron market growth during the forecast period. 


Supply Chain Disruptions amid Lockdown Restrictions Hindered Market Growth

The spread of COVID-19 resulted in several countries, including India, China, Japan, Germany, Italy, Canada, and the U.S. announcing lockdowns, thereby restricting the flow of resources and products. As finished goods distribution and raw material supply were affected, it rigorously distressed the revenue generation of direct reduced iron manufacturers. However, after the pandemic was under control, governments eased restrictions to aid nations and upscale the economic value chains by aiding domestic and small-scale businesses to recommence manufacturing operations. DRI companies have ramped up production to meet the growing demand for steel solutions. The manufacturers have started their activities by first implementing the indicated preventative measures.


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Direct Reduced Iron Technology to Decarbonize the Steel Industry

Steelmaking is still a high-energy and CO2-emitting process. However, the steel sector is dedicated to keeping its operations and product usage as low-impacts as possible. According to the World Steel Organization, every tonne of steel produced in 2020 resulted in an average of 1.89 tonnes of CO2 being released into the atmosphere. There has been a rise in industrial and scientific interest in developing technologies to create direct reduced iron due to the need for reduced energy use and greenhouse gas emissions on a global scale. Iron ore is stripped of oxygen to generate in its solid state. The carbon reductant is replaced with hydrogen in the DRI process, which lowers CO2 emission by using natural gas instead of coal.


Increasing Usage of Direct Reduced Iron in Steelmaking to Fortify the Market Growth

Increasing technology utilization in the steelmaking industry will be a major driving factor for market growth. The technology is extensively used for steelmaking, reflecting remarkable advantages compared to traditional blast furnace techniques. The process has gained traction for steelmaking that addresses the CO2 emission restriction. Changing production dynamics, which requires the start and go action, is accomplished with the technology, as it can be stopped and restarted immediately and efficiently.

DRI manufacturing and products have developed throughout the years to keep up with expanding needs of the steelmaking industry. As Electric Arc Furnace (EAF) steelmaking expands, it gives EAF steelmakers the broad flexibility to customize their furnace charges to market conditions. In addition, it also helps to enhance the capacity to produce higher-quality steels due to their adjustable carbon level, high metallic iron content, and consistent physical and chemical characteristics.

Changing downstream requirements for various end-use industries has prompted the demand as it is used to improve product quality. It helps to modulate carbon content easily per the product requirement, and the DRI forms a very low residual substance compared to normal scrap. It exhibits several benefits: low tramp material content, lower capital, operating costs, predictable chemistry, and relatively uninterrupted continuous iron making. Increasing steel consumption in various end-use industries is further anticipated to bolster the market growth.


Direct Reduced Iron Handling and Storage Risk to Stifle Market Development

DRI is susceptible to rusting (re-oxidizing) in the presence of oxygen, just like steel structures. Heat is produced during the oxidation process, which is significant in bulk DRI cargos. DRI’s sponge structure also prevents heat from dissipating, allowing isolated pockets of DRI to heat up quickly in bulk. After handling bulk materials, a brief rise in temperature of roughly 30 degrees Celsius caused by self-heating is possible. After coming into contact with water, the material may slowly emit hydrogen. This cargo produces heat and hydrogen when in contact with air, freshwater, or seawater. A concentration of hydrogen and air, which is combustible, can combine to create an explosive mixture.


By Form Analysis

Pellets Segment Accounted for the Largest Share due to Augmented Product Adoption

Based on form, the market is bifurcated into pellets and others.

Direct Reduced Iron (DRI) in pellet form is anticipated to remain the largest segment during the forecast period. DRI can be used in a variety of processes in the production of crude steel. Usually, directly reduced iron is used as a supplement for scrap in the EAF process. In addition, DRI is typically made from high-quality iron ore pellets, generally reduced by gas, to provide a highly metalized raw material for both traditional blast furnaces and electric arc furnaces. Furthermore, pellets are the most preferred among direct reduced iron mold types as they have better reactivity, are less expensive than lumps, and are easy to transport. Moreover, pellets-ore motley with coal is transferred into the rotary kilns and then heated by coal burners to produce DRI. Direct reduced pellets are often used in EAF with limited refining capacity; the iron feed and the successively directly reduced iron must be low.

By Production Process Analysis

Gas-based is Largest Segment Due to Increasing Demand for Steelmaking

By production process, the market is segmented into gas-based and coal-based.

For the reduction reaction, the gas-based process uses a shaft furnace, whereas the coal-based process uses one of the four reactor types. The reactors are rotary kiln, shaft furnace, fluidized bed reactor, and rotary hearth furnace. The rotary kiln is the most popular reactor for the coal process.

Gas-based segment accounted for the largest market share in 2021 and may continue its dominance until 2029. Gas condensation contains fewer impurities than coal condensation. The resulting iron is likely to be purer and produce higher-quality steel. The gas-based process produces significantly less carbon dioxide than coal-based processes. Coal-based segment to hold a significant share during the forecast period. Rotary kilns are used in coal-based reduction processes that convert the iron ore directly into metallic iron without the materials melting. In this process, metallic iron is produced by reducing iron oxide below the melting temperature of iron ore, i.e., 1,535°C using carbonaceous material in the non-coking coal.

By Application Analysis

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Steel Production Segment to Dominate Due to Rise in Demand for High-quality Steel

By application, the market is segmented into steel production, construction, and others.

The steel production segment holds the largest market share and dominates the market during the forecast period due to rise in the production of high-quality steel due to the adverse impact of low-quality raw materials on the environment. DRI is experiencing increased demand as a supplement to the improvement in steel quality required by steel manufacturers.

The construction segment is anticipated to register a significant growth rate during the forecast period due to residential infrastructure performing well and a surge in activity in various non-residential sectors. In recent years, the construction industry has grown significantly. Additionally, a rebound in residential construction is anticipated to boost the construction sector, which is expected to impact the market.


Asia Pacific Direct Reduced Iron Market Size, 2021 (USD Billion)

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Asia Pacific held the largest direct reduced iron market share in 2021, owing to increased product demand from numerous applications such as steel production and construction. The construction industry in India is anticipated to witness a significant growth rate during the forecast period. In addition, rising steel production and increasing demand from several end-use industries, such as aerospace and automotive, are expected to drive market growth in the region. Moreover, government support for the expansion of the chemical industry in the region is likely to further drive the market growth during the forecast period.

In North America, the market is anticipated to grow with a significant CAGR during the forecast period. The market is driven by improved production of oil and other natural gas, which requires DRI for the fracking process. A major factor driving the market is the growing steel industry. Steel is extensively used in multiple industries, including industrial machines, appliances, oil & gas, automotive, and construction. The region is witnessing a significant demand for steel from the oil and gas industry.

The market in Europe is anticipated to witness a significant growth rate owing to increasing investments in R&D activities and steel products demand from raised building and construction activities. Moreover, the construction industry accounts for more than half of global demand, according to the World Steel Association. One of the main factors fueling interest in steel production is the growing need for housing due to population growth.

The Latin America market is expected to see steady growth during the forecast period due to increase in steel demand to manufacture automotive parts. This growth is associated with the increased production of passenger and light commercial vehicles in the region. Steel being used in several end-use industries contributes to overall regional economic development.

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The Middle East & Africa market is expected to reach moderate growth during the forecast period owing to rapid growth of the residential building sector in the region.

Competitive Landscape

Key Players are Adopting Business Expansion Strategy to Maintain their Market Position

The global market is moving toward consolidation, with key players operating in the market such as Qatar Steel, Kobe Steel Ltd, ArcelorMittal, and NUCOR. Most manufacturers are expanding their business to gain competency in the industry and alleviate new entrants’ threats. Market participants fiercely compete with international and regional players with extensive distribution networks, regulatory know-how, and suppliers. In addition, companies have been signing contracts, strategic partnerships, and acquisitions with other market leaders to expand their existing markets.



  • October 2022- H2 Green Steel established a DRI plant powered by 100% green hydrogen and based on Midrex technology. The Midrex H2 plant has an annual production of 2.1 million tonnes of hot DRI and Hot Briquette Iron (HBI), which feeds the production of an initial 2.5 million tonnes of green steel in the soil of northern Sweden. This unique DRI system is being provided by a consortium of Midrex and Paul Wurth, an SMS group company.

  • May 2022- Kobe Steel launched “Kobenable Steel” and became Japan’s first provider of low CO2 blast furnace steel products with significantly reduced CO2 emissions during the blast furnace ironmaking process. The company planned to sell the new products in the fiscal year 2022.

  • March 2022- ArcelorMittal announced an investment of USD 292 million to create a new production unit for electrical steels at the Mardyck site in north of France. The facility specializes in producing electrical steels for the engines of electric vehicles, which complements ArcelorMittal’s existing electrical steel plant. The new industrial unit will have a 200 kiloton production capacity and will strengthen the French electromobility sector.

  • February 2022- Tosyali Algeria set a new world record for annual production of DRI through a single modular plant, producing more than 2.28 million tonnes in 2021.

  • March 2021- ArcelorMittal expanded its industrial plant at its site in Bremen. This plant offers the direct reduction of iron ore and EAF-based steelmaking. The company expanded an innovative DRI pilot plant and an EAF in Eisenhüttenstadt.


An Infographic Representation of Direct Reduced Iron Market

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The research report provides a detailed analysis of the market and focuses on crucial aspects such as leading companies and end-use industries. In addition, it offers insights into key trends and highlights vital industry developments. In addition to the factors mentioned above, the report encompasses various factors contributing to the market's growth in recent years. It further includes historical data & forecasts revenue growth at global, regional, and country levels and analyzes the industry's latest market dynamics and opportunities.

This report includes historical data & forecasts revenue growth at global, regional, and country levels, and analyzes the latest market dynamics and opportunities.

Report Scope & Segmentation



Study Period


Base Year


Estimated Year


Forecast Period


Historical Period


Growth Rate

CAGR of 9.0% from 2022 to 2029


Value (USD Billion) and Volume (Million Ton)


By Form, Production Process, Application, and Region

By Form

  • Pellets

  • Others

By Production Process

  • Gas-based

  • Coal-based

By Application

  • Steel Production

  • Construction

  • Others

By Region

  • North America (By Form, Production Process, Application, Country)

    • U.S.

    • Canada

  • Europe (By Form, Production Process, Application, Country)

    • Germany

    • U.K.

    • France

    • CIS

    • Rest of Europe

  • Asia Pacific (By Form, Production Process, Application, Country)

    • China

    • India

    • Japan

    • ASEAN

    • Rest of Asia Pacific

  • Latin America (By Form, Production Process, Application, Country)

    • Brazil

    • Mexico

    • Rest of Latin America

  • Middle East & Africa (By Form, Production Process, Application, Country)

    • South Africa

    • GCC

    • Rest of Middle East & Africa

Frequently Asked Questions

Fortune Business Insights says that the global market size was USD 29.80 billion in 2021 and is projected to reach USD 57.57 billion by 2029.

In 2021, the Asia Pacific market size stood at USD 17.47 billion.

Growing at a CAGR of 9.0%, the market will exhibit steady growth during the forecast period (2022-2029).

The steel production segment is expected to be the leading segment in this market during the forecast period.

The growing demand from steel industry will aid the market growth.

Qatar Steel, Kobe Steel Ltd, ArcelorMittal, and NUCOR are major players in the global market.

Asia Pacific held a dominant market share in 2021.

The rising demand from the iron and steel industry is expected to drive the product adoption.

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