sarwesh

General Characteristics
Sponge iron is a metallic product produced through direct reduction of iron and iron ore pellets in the solid state. It is a substitute for scrap and is mainly used in making steel through the secondary route. The process of sponge iron making aims to remove the oxygen from iron ore. The quality of sponge iron is primarily ascertained by the percentage of metallization (removal of oxygen), which is the ratio of metallic iron to the total iron present in the product. Sponge iron manufacture is highly sensitive to raw material characteristics. Therefore, it is essential to examine the chemical and physical characteristics of raw materials, both individually and in combination. The basic raw materials for the production of sponge iron are iron ore, non-coking coal and dolomite.

Global Scenario

* The total global production of sponge iron was estimated to be about 49.45 million tons in the year 2004
* India, Venezuela, Iran and Mexico are the four largest producers of sponge iron with about 16%, 14%, 11% and 11% share of world's total production.
* Sponge iron is increasing being used in steel making because of lower availability of scrap in the international market and increased use of Electric Arc Furnace in steel making.



Indian Scenario

* With the domestic steel industry picking up during the past year and prices moving up in leaps and bounds, India has emerged as the world's largest producer of sponge iron (or direct reduced iron), accounting for around 16 per cent of the global output.
* India is the global leader with a production of 8.07 million tons (Year 2004), followed by Venezuela with 6.9 million tons.
* Sponge iron is used to make steel by all Indian steel producers and is a substitute for steel melting scrap.
* Healthy demand growth in steel sector is also pushing sponge iron demand. Apart from declining availability of steel melting scrap, sponge iron demand has also gone up considerably and is likely to continue.
* About 45% of the domestic output is through EAF (Electronic Arc Furnace) route. However, going forward this is slated to increase. With steel production is likely to grow at 6%-7%, the demand for sponge iron is likely to grow at more than 10 percent till the year 2007 and then expected to stabilize at 8 percent after that.

Factors Influencing Demand & Supply of Steel Long and Steel Flat

* The demand for steel is dependent on the overall health of the economy and the infrastructure developmental activities being undertaken.
* The steel prices in the Indian market primarily depend on the domestic demand and supply conditions, and international prices.
* Government and different producer and consumer associations regularly monitor steel prices.
* The duty imposed on import of steel and its fractions also have an impact on steel prices.
* The price trend in steel in Indian markets has been a function of world's economic activity.
* Prices of input materials for iron and steel such as power tariff, freight rates and coal prices, also contribute to the rise in the input costs for steel making.

Domestic industry is showing improved performance on back of higher volume, improved realization, increased operating efficiency and financial restructuring.

Sector-wise Demand of Scrap and DRI/HBI (in lakh tons)
Period Sector Melting Scrap DRI/HBI
2001-02

EAF (Electric Arc furnace) 31 43
IF (Induction Furnace) 55 17
2006-07 EAF 45 60
IF
73

35
2011-12
EAF
64

82
IF
76

56

*HBI = Hot Briquetted Iron