Rising demand for DR pellet, lump in emerging markets: SIFW 2025

Published by:Shu Yi Zheng<>
29 May 2025 @ 10:40 UTC
Demand for direct-reduced (DR) pellets and DR lump is expected to increase in emerging markets such as Southeast Asia and the Middle East and North Africa (MENA) region, Anglo American’s MENA regional sales manager Dave Tan told the Singapore Iron Ore Forum on Wednesday May 28.

The forum is part of the Singapore International Ferrous Week (SIFW 2025) and, during a panel discussion examining rising demand trends in India, Southeast Asia and the Middle East, Tan highlighted the gap between steel production and direct reduction iron (DRI) capacity.
Tan said that that while DRI capacity is expected to rise alongside pelletizing capacity, the long-term supply of DR-grade pellets may struggle to keep up, leading to potential shortages in the next five to eight years.
Currently, DR pellets serve as the primary feedstock for DRI production. When a deficit in DR pellets emerge, driving premiums for pellets and lump ore wider, mills could shift towards high-grade lump ore, Dave Tan said, noting that already, demand for lump ore in the MENA region is slowly picking up.
Expanding demand There is a general consensus among market participants that China’s transition to DRI-based electric-arc furnace (EAF) steelmaking could be a slow process, Fastmarkets understands, and many expect mills there to increase pellet usage in the traditional blast furnace-basic oxygen furnace (BF-BOF) route to reduce carbon emissions.
Fastmarkets’ calculated its iron ore pellet premium over 65% Fe fines, cfr Chinaat $9.40 per tonne on May 23, down from its quarterly average at $11.87 per tonne in the first quarter of 2025.
Speaking on the sidelines of the conference, a trader from the eastern China province of Anhui, told Fastmarkets that pellet premiums in the CFR China market were being supressed by thin steelmaking margins, low coke prices and the availability of cheaper domestic pellet supplies in China.
But in the panel discussion, Tan said Anglo American was looking to expand beyond China, targeting North Africa – and Algeria and Egypt in particular – as key growth markets for high-grade lump.
And while Europe’s decarbonization efforts appear to have slowed, he added, the region remains a critical long-term market for low-carbon iron ore products.
Growth in demand for DRI and hot-briquetted iron (HBI) is also expected in Southeast Asian countries, such as Vietnam and Malaysia, he said, adding that Thailand could also see growth in the DRI space due to its expanding EAF capacity.
And Swapnil Patil, head of iron ore and sponge iron trading at Tata International, said in the panel discussion that more pellet from the Middle East was being shipped to India to fuel India’s ambition to increase its steel production capacity to 300 million tonnes by 2030.