Global Iron Ore Pellets Market, By Grade (Blast Furnace (BF) and Direct Reduced (DR)); By Trade (Captive and Seaborne); By Region (North America, Europe, the Asia-Pacific, the Middle East & Africa and Latin America) Trend Analysis, Competitive Market Share & Forecast, 2018-2027

GlobalIron Ore Pellets Market- Industry Trends & Forecast Report 2027

The global iron ore pellets market is growing Year-over-Year (YoY) and has reached USD 48.13 billion in 2020. The market is further expected to touch USD 62.13 billion by 2027, at a CAGR of 3.37% during 2021-2027 (forecast period). The iron ore pellets market is likely to grow during the forecast timeframe due to expanding steel production in developing economies of the Asia-Pacific, such as India, China, and Vietnam.

Iron ore pellets are spherical balls that are used in steel manufacturing. The iron ore pellets manufacture ultra-fine-particles with a diameter of 9 to 16 mm, which improves the overall performance of steel plants. Its consumption is majorly driven by the rising demand for steel from end-users including, automotive, manufacturing, and construction industry among others.

Source: BlueWeave Consulting

Global Iron Ore Pellets Overview

Iron ore pellets are small balls of iron ore used in the production of steel. They are manufactured using technology that makes use of the waste powder produced during the ore extraction process. To make ore pellets, first iron ore is crushed and ground to remove impurities. The resultant ore is mixed with a binding agent and then heated to create durable, marble-sized pellets. These pellets are then used for manufacturing steel for the construction of bridges, cars, planes, bicycles, household appliances, and much more. As compared to other types of iron ore, pellets are the best components for manufacturing iron due to their advantages, such as uniform size, high metallization rate, and enhanced permeability in blast furnaces to optimize fuel consumption rate, among others.

Global Iron Ore Pellets Market Trends

Growth Drivers

Limited Availability of High-Grade Lump

Mined iron ore comes in varying sizes, the largest of which is more than 1 meter (40 inches) across, and the smallest of which is about 1 millimeter (0.04 inch). Steel is made from around two billion tonnes of iron ore (average 62%) in the form of lumps, sinter, and pellets around the world. Previously, lump ores were the main source of iron in the manufacturing process. However, due to extensive mining activities by multiple firms, high-grade lump ore reserves have been steadily depleting over time. This limited availability of high-grade lump ore is becoming a cause of concern for the iron & steel industry as it is becoming increasingly difficult to find suitable lump ore for direct use in blast furnaces. Shortage of high-grade iron ore lumps is a major driver of iron ore pellet sales.

Furthermore, the sintering process produces more waste than the pelletizing process, which is why major steel producers tend to use iron ore pellets as blast furnace feed over lump ore. These are the key factors driving the growth of the market. Iron and steel manufacturing is among the most energy-intensive industries accounting for the largest share, about 27 percent, of global carbon dioxide (CO2) and other toxic emissions from the manufacturing sector.

Environmental Benefits

Iron Ore pellet usage gradually reduces carbon dioxide and other poisonous gas emissions such as sulfur oxides, nitrogen oxides, and carbon monoxide particulate matter, thereby,  saving the environment. It also cuts down the expenditure on waste gas treatment, flue gas desulfurization (FGD), scrubbers, and others. Additionally, the pelletizing process decreases the emission rate of Carbon Dioxide (CO2) by 85%, Sulfur Oxides(SOx) by 90%, and Nitrogen Oxides (NOx) by 20% as compared to sintering, thus, leaving a light overall ecological footprint. Environmental concerns have resulted in profound regulatory scrutiny for highly polluting industries, including power, iron, and steel, among others.

Restraints

The Fluctuations in the Prices of Raw Material

The fluctuations in the prices of raw materials are hampering the growth of the global iron ore pellets market. Fluctuating raw material costs and inadequate price control can negatively impact a company's performance. The cost of raw materials remains the top overall business concern among industries and manufacturers. With regard to the extreme price volatility of raw materials, it becomes a real challenge for manufactures to remain competitive and assure sustainable margins. Chemicals and manufacturing industries are highly affected when prices of raw material fluctuate, which in turn influence the bottom line results of companies, besides hindering the market growth.

Impact of COVID-19

The coronavirus-induced pandemic has severely affected the global economy besides affecting business operations. Due to the high infection rates and adverse impact on public health systems, various countries had to enforce nationwide lockdowns which had a major impact on industrial supply chains, trade, and related services.

COVID-19 has had a major impact on the global iron ore pellets market as it stalled the development of several industries, including the construction industry, as well as the steel manufacturing industry that uses iron ore pellets. Additionally, nationwide lockdowns had a negative impact on the construction sector, supply chain, raw material manufacturers, mining companies, and logistics sector, which in turn stifled the growth of the iron ore pellets market. Additionally, production, operation, and infrastructural development activities have decelerated owing to the spread of coronavirus, which is further anticipated to impact the demand. Additionally, the Asia-Pacific is expected to be severely impacted by the spread of COVID-19 owing to the pandemic’s impact on China, Japan, and India.

Global Iron Ore Pellets Market: By Grade

Based on the grade, the global iron ore pellets market is segmented blast furnace and direct reduced. The Direct Reduced (DR Reduced) segment accounted for the largest share in the market in 2020 and is likely to dominate over the forecast period as well. This growth is attributed to product benefits including, lower carbon emission, improvement in space utilization of steel plant, and elimination of sintering process. In 2020, all steel produced in the U.S. was produced in an electric arc furnace using DR-grade pellets.

Global Iron Ore Pellets Market: By Trade

Based on trades, the global iron ore pellets market is grouped into captive and seaborne. Captive holds the largest share in the marking as most of the supply of iron ore pellets are consumed in-house or exported for steel production to local customers.Most of the major steel companies across the globe that account for a major share in global steel production source their iron ore pellet requirements through their manufacturing firms.

Source: BlueWeave Consulting

Global Iron Ore Pellets Market: Regional Insights

Geographically, the iron ore pellets market is categorized into North America, Europe, the Asia-Pacific, the Middle East & Africa, and Latin America. The Asia-Pacific has the largest share in the global market owing to China’s growing steel output, which is a key parameter supporting regional demand. Additionally, major countries are experiencing significant growth across end-user industries. Emerging nations such as India have announced to invest in green steel technology to reduce the waste generated during the manufacturing stage. Such trends will positively influence regional growth from 2021 to 2027.

Competitive Landscape

The key players in this market are Rio Tinto Ltd., BMP Group Ltd., Fortescue Metals Group Ltd., Hancock Prospecting Pty Ltd., Vale S.A., Cleveland-Cliffs Inc., United States Steel Corporation, ArcelorMittal S.A., LKAB Koncernkontor, National Mineral Development Corporation, and other prominent players. Key market players are entering into collaborations and engaging in mergers & acquisitions of companies to capture a greater market share. Furthermore, the market participants are focusing on improving their product quality to attain a competitive edge over other players.

Recent Development

·         In February 2021, Rio Tinto invested USD 105 billion to upgrade its Port-Alfred Port Facilities in Saguenay, Quebec, Canada. The investment aims at improving the safety and efficiency of receiving and unloading operations for raw materials used in manufacturing aluminum at Rio Tinto's operations in the region.

·         In January 2021, Vale restarted its production at the pelletizing plant in Vargem Grande, Nova Lima (MG), which was halted since February 2019. With a nominal capacity of 7 million tons per year (MTPY), the plant is projected to generate approximately 4-5 Mtpy in 2021.

Scope of the Report

By Grade

Ø  Blast Furnace (BF)

Ø  Direct Reduced (DR)

By Trade

Ø  Captive

Ø  Seaborne

By Region

Ø  North America

Ø  The Asia-Pacific

Ø  The Middle East & Africa

Ø  Latin America

Ø  Europe

FAQ’s

1.    What is the current size of the global iron ore pellets market?

Answer: The global iron ore pellets market has reached USD 48.13 billion in 2020.

2.    What are the major factors driving the growth of the global iron ore pellets market?

Answer:  The major factors driving the growth of the global iron ore pellets market are the limited availability of high-grade lumps and environmental benefits.

3.    Who are the key players in the global iron ore pellets market?

Answer:  The key players in the global iron ore pellets market include Rio Tinto Ltd., BMP Group Ltd., Fortescue Metals Group Ltd., Hancock Prospecting Pty Ltd., Vale S.A., Cleveland-Cliffs Inc., United States Steel Corporation, ArcelorMittal S.A., LKAB Koncernkontor, National Mineral Development Corporation, and other prominent players.

4.    Which grade accounted for the largest share in the global iron ore pellets market?

Answer: Direct grade account for the largest share in the global iron ore pellets market.

5.    Which region growing at a higher rate in the global iron ore pellets market?

Answer: The Asia-Pacific is growing at a higher rate in the global iron ore pellets market.