Direct Reduced Iron Market Report: Trends, Forecast and Competitive Analysis to 2031

The global direct reduced iron market is expected to grow with a CAGR of 6.2% from 2025 to 2031. The major drivers for this market are the rising demand for steel in construction & automotive industries, the growing preference for cleaner production methods, and the increasing adoption of electric arc furnaces.

The future of the global direct reduced iron market looks promising with opportunities in the metallurgical and steel markets.

• Within the type category, gas based technology is expected to witness higher growth over the forecast period.
• Within the application category, steel is expected to witness higher growth.
• In terms of region, APAC is expected to witness the highest growth over the forecast period.

Emerging Trends in the Direct Reduced Iron Market

The direct reduced iron market is being hugely impacted by the world's drive towards decarbonization and changing requirements of the steel sector. A number of important trends are impacting its future direction.

• Green Hydrogen-Based DRI Production: One of the most significant emerging trends is the development and implementation of DRI production processes based on green hydrogen as the reducing agent. Green hydrogen, generated by electrolysis with renewable energy, provides a route to near-zero carbon steelmaking. Pilot plant projects and scheduled commercial-scale plants based on this technology are gathering pace, stimulated by ambitious decarbonization strategies and technological developments.
• Carbon Capture and Storage Integration with Natural Gas-Based DRI: As a means to minimize the carbon footprint of current natural gas-based DRI production, integration of carbon capture and storage (CCS) technologies is a growing trend. It consists of capturing the CO2 produced during the reduction process and sequestering it in the ground permanently. Although not completely carbon-free, CCS reduces emissions significantly from that of traditional natural gas-based DRI production and is a bridging solution.
• Growing Application of DRI in Electric Arc Furnaces: The growing application of EAFs for steelmaking, motivated by their relatively lower capital expenditures and versatility to utilize scrap and virgin iron units, is propelling the demand for DRI as a premium metallic feed material. The stable composition and minimal residual element content of DRI render it an excellent charge material for EAFs, especially for the production of high-quality steel products.
• Advanced DRI Production Technologies Development: Research and development efforts are ongoing to enhance the efficiency and flexibility of DRI production operations. These involve reactor design improvements, heat recovery systems, and improved use of a broad array of iron ore feedstocks. These technological advancements are intended to decrease the cost of production and make DRI more competitive with other iron-bearing materials.
• Increasing Use of Hot Briquetted Iron: Hot Briquetted Iron (HBI), a densified version of DRI, is becoming increasingly popular due to its amenability of handling, transportation, and storage and resistance to re-oxidation. The rising need for DRI in areas that do not have direct access to DRI production plants is fueling the growth of the HBI market, enabling global trade and usage of DRI.

These trends are synergistically transforming the direct reduced iron market by leading the way towards cleaner steel manufacturing pathways, accelerating the position of DRI in EAF steelmaking, and making DRI more efficient and globally accessible as a critical metallic feedstock. The shift toward hydrogen-based DRI and incorporation of CCS is central to decarbonization across the industry.

Recent Developments in the Direct Reduced Iron Market

The direct reduced iron industry is witnessing some important developments that are impacting its manufacturing processes, quality of the product, and market dynamics as a whole.

• Pilot and Demonstration Plants for Hydrogen DRI Production: Another major step is the installation of many pilot and demonstration facilities globally dedicated to the production of DRI on the basis of hydrogen as a sole or even main reducing agent. These activities are intended to demonstrate the feasibility of green-hydrogen-based steelmaking on an industrial scale, varying in reactor design as well as process conditions.
• Carbon Capture Technology-Based Optimization of Natural Gas-Based DRI: Current natural gas-based DRI plants are more and more implementing and exploring carbon capture technologies to minimize their carbon footprint. These efforts include the capture of the CO2 produced during reduction for storage or utilization, making natural gas-based DRI a low-carbon option in the medium to short term.
• Designing Direct Reduction Technologies Suitable for 100% Renewable Energy: Projects are in process to design DRI production techniques that can efficiently operate with intermittently available renewable energy. These include reactor design and control systems capable of operating under intermittent availability of hydrogen and minimizing energy utilization as per availability of renewable energy.
• Development in the Manufacturing of High-Quality DRI for Specialty Steel Applications: Increased emphasis is being placed on manufacturing DRI with precise chemical and physical characteristics designed for application to specialty steelmaking. This entails proper screening of iron ore feedstock and exact control over the reduction process to produce low levels of impurities and uniform quality necessary for high-grade steel products.
• Enhanced Investment in DRI Production Capacity in Areas with High Renewable Energy Resources: Areas with high and cheap renewable energy potential are tempting investments in new DRI production plants, with the goal of using green hydrogen. This positioning strategy is looking to use renewable energy for producing green steel and create competitive supply chains for low-carbon metallic feedstock.

These advancements are contributing noticeably to the direct reduced iron industry by forcing a shift to more environmentally friendly production processes, enhancing the quality and suitability of DRI, and positioning plant facilities to leverage renewable energy sources. Whether the success of hydrogen-based DRI ventures and the implementation of carbon capture technology will play the main role in defining the future of the industry remains to be seen.

Strategic Growth Opportunities in the Direct Reduced Iron Market

There are a number of strategic growth opportunities in the direct reduced iron market across different applications due to the requirement for quality metallic feedstock and the demand for decarbonization in steel production.

• EAF Steelmaking: Growing use of EAFs to produce steel around the world is a big growth opportunity for DRI. EAFs can produce high-quality steel using DRI as major charge material, with benefits such as uniform chemistry, low residual elements, and the potential to make high-grade steel. Growth in EAF capacity, especially in regions where scrap is readily available or where high-quality steel is of priority, will propel demand for DRI.
• Integrated Steel Mills (Blast Furnace - Basic Oxygen Furnace Route): DRI could be employed as an additional charge material in blast furnaces in order to make them more productive, decrease their coke consumption, and reduce the emission of greenhouse gases. Though the main route in integrated plants, the introduction of DRI provides a channel for the partial decarbonization of this part and for an increase in their operational efficiency.
• High-Purity Iron for Specialty Uses Production: Low-impurity DRI is an excellent feed material for the manufacture of high-purity iron with specialty uses in powder metallurgy, magnetic technology, and catalysts. There will be growth opportunities for well-quality DRI producers in specialized materials as increasing demand for advanced materials will establish niche growth scenarios.
• Hydrogen DRI Decarbonization of Steelmaking: The long-term strategic growth potential is in the mass adoption of green hydrogen-based DRI production. As green hydrogen becomes cheaper and the need to decarbonize increases, hydrogen-based DRI will be a key route for the steel sector to reach near-zero emissions. Investment in hydrogen infrastructure and DRI plant development in areas with renewable energy resources will be pivotal.
• Hot Briquetted Iron (HBI) for International Trade: The manufacture of HBI from DRI provides a large growth potential by allowing the cost-effective transportation and storage of high-quality metallic feedstock over long distances. Areas not having direct proximity to DRI production can utilize HBI as a premium material of charge to their steel plants, enabling international trade and market access for DRI producers.

These strategic growth prospects are influencing the direct reduced iron market by making it a central facilitator for both traditional and green steel production paths. The growing demand from EAFs, the prospect of decarbonizing integrated mills, the requirement for high-purity iron, the emergence of hydrogen-based DRI, and international trade through HBI all indicate a massive growth of the DRI market during the next few decades.

Direct Reduced Iron Market Drivers and Challenges

Direct reduced iron market is driven by a multifaceted set of drivers and challenges, affecting its growth, technological development, and general sustainability in the transitioning steel industry.

The factors responsible for driving the direct reduced iron market include:

• Growing emphasis on decarbonizing steel production: The worldwide steel industry faces mounting pressure to minimize its own carbon footprint. DRI, especially when using green hydrogen in production, has a much lower-carbon version compared to conventional blast furnace operation and is stimulating the use as one of its principal decarbonization routes.
• Increasing Need for High-Quality Metallic Feedstock for EAFs: The growing utilization of Electric Arc Furnaces (EAFs) in steelmaking requires high-quality metallic inputs with minimal residual element content. DRI is a perfect feedstock for EAFs, allowing the manufacturing of high-grade steel products, thereby fueling its demand.
• Access to Abundant and Low-Cost Natural Gas in Some Areas: Areas with access to abundant and relatively low-cost natural gas have a cost advantage in the production of natural gas-based DRI, making it an economically viable substitute for other iron-bearing materials.
• Government Policies and Incentives for Green Steel Production: Governments across the globe are introducing regulations and offering incentives to encourage green steel production. This includes funding for hydrogen-based DRI projects and carbon capture programs, which will further propel the use of DRI.
• Increasing Awareness about the Environmental Superiority of DRI: DRI production with natural gas or hydrogen, unlike the energy-efficient and emission-rich blast furnace pathway, presents much higher environmental advantages, such as lower energy requirement and less emission of greenhouse gases, making it a growing preferred choice.

Challenges in the direct reduced iron market are:

• High Production Cost of Green Hydrogen: The high cost of green hydrogen production, a key component for near-zero emission DRI, is still a major hurdle to the large-scale deployment of this technology. Reductions in the cost of renewable energy and electrolyzer technologies are needed to make green hydrogen-based DRI economically viable.
• Hydrogen Production and Transportation Infrastructure Needs: Investment in proper infrastructure to produce, store, and transport hydrogen is a significant impediment for the expansion of hydrogen-based DRI. Huge amounts of investment in pipelines, storage tanks, and electrolyze capacity are necessary.
• Price Competitiveness of DRI Relative to Iron Ore and Scrap: The cost of DRI must be competitive with conventional iron ore and steel scrap in order to be widely adopted. Volatility in iron ore and scrap prices can affect the economic viability of DRI, especially in areas that lack access to low-cost natural gas or green hydrogen.

In short, the direct reduced iron market is dominated by the growing emphasis on decarbonization, the need for high-quality EAF feedstock, availability of natural gas in certain geographies, government incentives for green steel, and the environmental advantages of DRI. But despite the potential, there are challenges such as the high cost of green hydrogen, the non-existence of hydrogen infrastructure, and the price competitiveness of DRI that must be met in order for the market to achieve full potential towards the shift towards a sustainable steel industry.

List of Direct Reduced Iron Companies

Companies in the market compete on the basis of product quality offered. Major players in this market focus on expanding their manufacturing facilities, R&D investments, infrastructural development, and leverage integration opportunities across the value chain. With these strategies direct reduced iron companies cater increasing demand, ensure competitive effectiveness, develop innovative products & technologies, reduce production costs, and expand their customer base.

Some of the direct reduced iron companies profiled in this report include:

• Mobarakeh Steel Company
• Tata Sponge
• Welspun Group
• Jindal Steel & Power
• Umesh Modi Group
• Prakash Industries Limited
• Sajjan
• Bhushan
• Sarda Energy & Minerals Limited
• Qatar Steel

Direct Reduced Iron Market by Segment

The study includes a forecast for the global direct reduced iron market by type, application, and region.

Type [Value from 2019 to 2031]:

• Gas Based Technology
• Coal-Based Technology

Application [Value from 2019 to 2031]:

• Metallurgical
• Steel
• Others

Region [Value from 2019 to 2031]:

• North America
• Europe
• Asia-Pacific
• The Rest of the World

Country-wise Outlook for the Direct Reduced Iron Market

The direct reduced iron market is witnessing a drastic change, mainly due to the growing interest of the global steel industry in decarbonization and the demand for high-quality metallic feedstock for electric arc furnaces (EAFs). Recent trends are marked by advancements in green hydrogen-based DRI production technologies, developments in natural gas-based DRI processes with improved efficiency and lower emissions, and increasing focus on the utilization of DRI in integrated steel plants to enhance blast furnace efficiency and reduce coke consumption. Regional considerations such as availability of energy and environmental norms are also strongly influencing market developments.

• United States: The US DRI market is seeing renewed activity, driven by investment in EAF steelmaking capacity and the possibility of green hydrogen production. There are various projects in progress to set up DRI production units using natural gas with CCS or considering green hydrogen as a reductant. The emphasis is on the availability of a reliable source of high-grade metallic feedstock for the growing EAF industry and on decreasing the carbon footprint of steelmaking.
• China: The world's largest steel-producing country, China, has a relatively modest but expanding DRI industry. Recent activity has included studies and pilot work on the use of hydrogen in DRI production, consistent with the country's overall decarbonization strategy. Although coal-based steel production is still predominant, the expanding use of EAFs for scrap treatment and the potential for eventual green hydrogen supply could spur additional expansion in the Chinese DRI market.
• Germany: Germany leads in green steel initiatives, with considerable investments in DRI production through hydrogen. There are multiple pilot and commercial-scale projects in the works to make use of green hydrogen from renewable energy. The goal is to cut down dramatically on carbon emissions from steelmaking and build a sustainable value chain for high-quality feedstock for its EAF-based steel business.
• India: India's DRI market is large and mostly coal gasification-based. Developments include work to increase the efficiency and environmental record of coal-based DRI plants. Interest is also growing in exploiting natural gas, and eventually green hydrogen, as substitute reductants, although these are as yet in embryonic stages on account of infrastructure and cost issues. India's increasing EAF capacity will help spur DRI demand further.
• Japan: Japan's DRI market is comparatively small, with emphasis on high-grade DRI for specialty steel production. Recent activities include exploration into the use of hydrogen in DRI production to keep in line with the nation's carbon neutrality goals. The economic feasibility and reliable availability of green hydrogen are most relevant for the future expansion of hydrogen-based DRI production due to Japan's dependence on imported energy.

Features of this Global Direct Reduced Iron Market Report

• Market Size Estimates: Direct reduced iron market size estimation in terms of value ($B).
• Trend and Forecast Analysis: Market trends (2019 to 2024) and forecast (2025 to 2031) by various segments and regions.
• Segmentation Analysis: Direct reduced iron market size by type, application, and region in terms of value ($B).
• Regional Analysis: Direct reduced iron market breakdown by North America, Europe, Asia-Pacific, and Rest of the World.
• Growth Opportunities: Analysis of growth opportunities in different type, application, and regions for the direct reduced iron market.
• Strategic Analysis: This includes M&A, new product development, and competitive landscape of the direct reduced iron market.
• Analysis of competitive intensity of the industry based on Porter’s Five Forces model.

This report answers the following 11 key questions:

• What are some of the most promising, high-growth opportunities for the direct reduced iron market by type (gas based technology and coal-based technology), application (metallurgical, steel, and others), and region (North America, Europe, Asia-Pacific, and the Rest of the World)?
• Which segments will grow at a faster pace and why?
• Which region will grow at a faster pace and why?
• What are the key factors affecting market dynamics? What are the key challenges and business risks in this market?
• What are the business risks and competitive threats in this market?
• What are the emerging trends in this market and the reasons behind them?
• What are some of the changing demands of customers in the market?
• What are the new developments in the market? Which companies are leading these developments?
• Who are the major players in this market? What strategic initiatives are key players pursuing for business growth?
• What are some of the competing products in this market and how big of a threat do they pose for loss of market share by material or product substitution?
• What M&A activity has occurred in the last 5 years and what has its impact been on the industry?