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Saudi Arabia’s DRI Market Outlook Report

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Direct-reduced iron (DRI) is produced in a solid process that converts iron ore pellets or fines into pure iron by being reduced using reducing agents. DRI products are divided into three categories based on shape and appearance: sponge iron, briquettes, and fine; fine is usually used as cold-briquetted iron. DRI can also be categorized based on production process: direct-reduced using coal, and direct-reduced using natural gas. A major part of the Middle East as one of the most important sources of natural gas has been dominated by DRI products using natural gas.

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Product Description

With a GDP of over $793 billion in 2019, Saudi Arabia was the largest economy in the region that year. The country’s economy, the second richest country in terms of natural resources, is heavily dependent on oil, its main natural resource. But since the introduction of the 2030 Vision in 2016, the country has determined to minimize oil reliance. Saudi Arabia is the third largest producer of crude steel in the region, behind Saudi Arabia and Iran. Owing to the abundant availability of natural gas, steelmakers use direct reduction in EFs to produce steel. However, with the increasing volume of ferrous scrap in the Arab states of the Persian Gulf, the share of scrap in the country’s steelmaking feed has increased.

Market drivers of Saudi Arabia’s DRI

Over the past years, more than 85% of the country’s steel has been produced using sponge iron, which has recently declined to 75% due to the tighter availability of sponge iron. Meanwhile, part of the country’s steelmaking capacity has remained idle due to tight raw material availability. However, forecasts suggest that crude steel output will increase over the coming years. Thus, the gap between sponge iron supply and demand is expected to widen.

Ferrous scrap is the only material that can replace sponge iron to produce crude steel. Despite the generally higher prices of scrap compared to sponge iron, scrap availability in the Persian Gulf region has improved over the recent years. In 2019, a significant part of the country’s crude steel was produced through the recycling and remelting of scrap. Thus, scrap can be a risk to sponge iron, threatening to dampen its market growth.

One of the most important issues for producers of sponge iron is the limited availability of DRI-grade pellets as raw material; over the past years, Saudi Arabia has always imported (from Brazil) a significant part of pellets required by sponge iron producers. The high transportation costs involved in securing raw materials, which leads to higher sponge iron prices, will dampen steelmakers’ interest in using sponge iron and prompt them to replace it with scrap.

Saudi Arabia reported the first case of Covid-19 in early March 2020. Lockdown measures were then implemented, leading to a 70% drop in the country’s mobility index. As the pandemic continued to spread across the country, more strict measures were taken, putting further pressure on the mobility index. The country is now past the first wave of Covid-19, but many are still forecasting worse to come in the coming months.

Overview of Saudi Arabia’s DRI market

Saudi Arabia is the second largest producer of sponge iron in the region, behind Iran. The country’s sponge iron is entirely produced using natural gas. With the exception of one plant, all sponge iron producers in the country use the Midrex technology. The production of sponge iron in Saudi Arabia has always been affected by the tight availability of DRI-grade pellets as raw materials. Thus, despite the development of the sponge iron market and demand, output has remained relatively unchanged. As a result, many steelmakers have resorted to using scrap instead; gradually, the sponge iron deficit that was met through imports was replaced with scrap, leading to a decline in the country’s net imports of iron sponge. This is expected to continue over the short term and a considerable share of the country’s demand for sponge iron is likely to be imported; in the long term, however, securing scrap will become a new challenge for steelmakers, which can bring back the boom to the country’s sponge iron market.

Breakdown of Saudi Arabia’s DRI market

Saudi Arabia’s DRI market is divided into sponge iron and briquettes. Since briquettes are less porous than sponge iron, they are easier to transport than sponge iron. Due to this, hot-briquetted iron takes a sizeable share in total DRI trade. Yet, sponge iron takes the largest share of DRI output and consumption in Saudi Arabia.

Key players in Saudi Arabia’s DRI market:

  • National Steel Co.
  • Saudi Iron and Steel Co. (Hadeed)
  • Direct Reduction Iron Co. Ltd. (Al-Ittefaq Group)

Additional Information

Industry

DRI and HBI
Report Type

Industry Report
Region

Saudi Arabia

Specifications

Report Attribute Details
The base year for estimation 2019
Historical data 2009-2018
Forecast period 2020-2025
Quantitative units Value in USD and Volume in Tonne
Report coverage Market Overview, Dynamics, Market Outlook, Risks to Forecast, Consumer Market, Industry Overview, Market Landscape, Competitive Landscape, Market Attractiveness, External Macro Environment Analysis
Segments covered Source, Composition, Type, Application
Pricing and purchase options Please explore our purchase options to meet your exact research needs.

Reasons to Buy

  • Recognize the geographical distribution of import demand
  • Identify the current and future key players of the trading market
  • Achieve a better insight on potential target markets
  • Understand the behavior of major suppliers/customers either globally or regionally
  • Identify competitors as a feed for market analysis

Table of Content

  1. Executive summary
  2. Introduction
    • Objective
    • Market under study
    • Product
      • Product specifications
      • Consumption structure
        • Applications
        • Physical properties
      • Subjects discussed
      • Geographical scope under study
      • Study timeframe
      • Study currency
      • Potential audience
  1. Market dynamics
    • Market drivers
    • Restraints
    • Opportunities
    • Challenges
  2. Market overview
    • Market size
    • Industry capacities
      • Existing capacities
        • Capacity distribution
        • Geographical distribution of capacities
      • Future capacities
    • Output
      • Output trends
      • Operating rates
    • Consumption
      • Consumption trend
      • Consumption Share of domestic product
    • Trade
      • Exports
      • Imports
      • Trade balance
      • Market balance
    • Market breakdown by product type
    • Market breakdown by product type
    • Market breakdown by application
    • Inventory
      • Producers inventory
      • Consumers inventory
      • Traders inventory
  1. Market outlook
    • Market factors
      • Raw materials
      • Costs and prices
      • Competition
      • The government
      • Other factors
    • Future scenarios
    • Risks to forecast
  2. Consumer markets
    • End-user markets
      • Building construction
      • Infrastructure construction
      • Transportation manufacturing
      • Industrial equipment manufacturing
      • Durable goods manufacturing
      • Consumable goods manufacturing
    • Direct consumer markets
      • Major Direct consumers
        • Existing capacities
        • Drivers
  1. Export potentials
    • Destinations
      • Trade and insurance costs
      • Import market suppliers
      • Producers potential share
  1. Industry overview
    • Raw materials
      • The supply volume of raw materials
      • Supply channels of raw materials
      • Raw materials procurement costs
    • Cost structure of producers
    • Production cost curve
    • Industry value added
    • Generated new scrap
    • Technology
  2. Market landscape
    • Domestic sales markets
      • Pricing in the domestic market
      • Potential domestic demand
      • Trade agreements for imports
      • Foreign suppliers
    • Foreign sales market
      • Prices
      • Potential markets overview
      • Trade agreements for exports
      • Foreign customers
  1. Competitive landscape
    • Producers
      • Company profile
      • Revenue structure
      • Gross profit margins
      • Capacity, output and sales
    • Consumers
      • Company profile
      • Revenue structure
      • Gross profit margins
      • Capacity, output and sales
  1. Market attractiveness
    • Industry rivalry
    • Threat of new entrants
    • Threat of substitutes
    • Bargaining power of buyers
    • Bargaining power of suppliers
    • Conclusion of Porter analysis
  2. PESTEL analysis
    • Political factors
    • Economic factors
    • Social factors
    • Technology factors
    • Environmental factors
    • Legal factors
  3. SWOT analysis
    • Large-scale companies with favorable conditions
      • Short-term strategies
      • Long-term strategies
    • Large-scale companies with unfavorable conditions
      • Short-term strategies
      • Long-term strategies
    • Small enterprises with favorable conditions
      • Short-term strategies
      • Long-term strategies
    • Small enterprises with unfavorable conditions
      • Short-term strategies
      • Long-term strategies

List of Figures

  1. Output and consumption; 2009-2018
  2. Market share of product applications; 2018
  3. Market surplus; 2018-2025
  4. Production process flowchart
  5. Market size; 2009-2025
  6. Existing capacity; 2009-2018
  7. Capacity distribution; 2018
  8. Geographic distribution of capacities; 2018
  9. Development of future capacity; 2009-2025
  10. Amount of output; 2009-2025
  11. Operating rates of production plants; 2009-2025
  12. Amount of consumption; 2009-2025
  13. Consumption share of domestic product; 2009-2025
  14. Exports of product; 2009-2018
  15. Imports of product; 2009-2018
  16. Historical trade balance; 2009-2018
  17. Future Market balance; 2020-2025
  18. Market output breakdown by alloy type; 2009-2025
  19. Market consumption breakdown by alloy type; 2009-2025
  20. Market balance breakdown by alloy type; 2009-2025
  21. Market output breakdown by product type; 2009-2025
  22. Market consumption breakdown by product type; 2009-2025
  23. Market balance breakdown by product type; 2009-2025
  24. Market consumption breakdown by application; 2009-2025
  25. Inventories of raw materials and products at producers factories; 2009-2018
  26. Consumers’ inventory of product; 2009-2018
  27. Traders’ inventory; 2009-2018
  28. Production forecast, according to raw materials and sales analysis; 2018-2025
  29. Market surplus; 2018-2025
  30. The share of end-user industries in the consumption; 2009 and 2018
  31. Changes in the end-consumption of extrusion products; 2018 vs 2025
  32. Applications in building construction industry; 2018
  33. Applications in infrastructure construction industry; 2018
  34. Applications in transportation manufacturing industry; 2018
  35. Applications in industrial equipment manufacturing industry; 2018
  36. Applications in durable goods manufacturing industry; 2018
  37. Applications in consumable goods manufacturing industry; 2018
  38. Capacity distribution structure of direct consumers; 2018
  39. Existing capacities of direct consumers in each province; 2018
  40. Suppliers of the export potential destination; 2018
  41. Historical exports to the export potential destination and future potential; 2016-2025
  42. Up-stream domestic supply; 2009-2018
  43. Raw materials domestic supply; 2009-2018
  44. Supply channels of producer plants
  45. Spot price of raw material in the market; 2009-2025
  46. Cash cost structure for production the product; 2018
  47. Production cost curve of the plants; 2018
  48. Gross value added of the industry; 2009-2018
  49. Generated new scrap; 2009-2018
  50. Sales channels
  51. Realized price of the product in the market; 2009-2025
  52. Potential demand of each province; 2018
  53. The main foreign suppliers to the market; 2009-2018
  54. FOB price vs domestic market; 2009-2025
  55. Map of global major importers > 20,000t; 2018
  56. Major foreign customers; 2009-2018
  57. Revenue structure of the producers; FY2018
  58. Sales income and gross profit margin of the producers; FY2009-2018
  59. Output and sales of the producers; FY2009-2018
  60. Revenue structure of the consumers; FY2018
  61. Sales income and gross profit margin of the consumers; FY2009-2018
  62. Output and sales of the consumers; FY2009-2018
  63. SWOT matrix for large-scale companies with favorable conditions
  64. Strategies positioning for large-scale companies with favorable conditions
  65. SWOT matrix for large-scale companies with unfavorable conditions
  66. Strategies positioning for large-scale companies with unfavorable conditions
  67. SWOT matrix for small enterprises with favorable conditions
  68. Strategies positioning for small enterprises with favorable conditions
  69. SWOT matrix for small enterprises with unfavorable conditions
  70. Strategies positioning for small enterprises with unfavorable conditions

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