Direct Reduced Iron · Glossary

Direct Reduced Iron, or DRI for short, refers to directly reduced iron, also known as sponge iron. It is produced from iron ore by removing oxygen from the ore in the solid state, without melting it into liquid pig iron as in the conventional blast furnace. The product consists predominantly of metallic iron. Depending on the process, ore quality and process control, however, it still contains accompanying substances from the ore (gangue), some carbon and a residue of incompletely reduced iron oxide. DRI is generally not finished steel, but an intermediate product for further steelmaking.

The technical core of direct reduction is a chemical reduction. Iron ore contains iron mostly in oxidized form, for example as hematite or magnetite. A reducing agent removes the oxygen from the iron oxide. In shaft furnace plants today, this is mostly done with natural gas or a reducing gas produced from it, which consists mainly of carbon monoxide and hydrogen. Contrary to a common assumption, however, DRI is not automatically gas-based: a large and growing share of world production comes from coal-fired rotary kilns, above all in India. Such coal-based DRI causes significantly higher emissions than gas-based DRI from shaft furnaces. In plants for more climate-friendly steel production, hydrogen is increasingly to be used. The reduction then produces predominantly water vapor instead of carbon dioxide. This does not automatically make the process completely emission-free, because electricity generation, hydrogen production, ore preparation and pelletizing, transport, electrode consumption, additives and downstream process steps also enter the climate balance.

Orders of magnitude and product forms

According to the world statistics published by Midrex, around 140.8 million tonnes of DRI were produced worldwide in 2024, 3.8 percent more than in 2023. Since 2019, production has risen by a good 30 percent. The growth in 2024 came mainly from Indian coal-based rotary kilns, while production from gas-based shaft furnaces declined slightly. For 2025, Midrex reports a further increase to around 151 million tonnes. These statistics come from a plant manufacturer; according to its own statements, Midrex has the data collection reviewed by World Steel Dynamics.

DRI is stated in tonnes. For technical assessment, however, not only the mass matters, but above all the degree of metallization, that is, the share of metallic iron in total iron. DRI customary for steelmaking is typically roughly between a good 90 and 97 percent. Material with less than 85 percent metallization is regarded as merely pre-reduced and is not suitable for steelmaking. Also important are the carbon content, residual oxides, gangue content and the temperature at which the material is further processed.

Cold DRI (CDRI) is cooled to about 50 °C in the lower part of the reduction furnace. It must be kept dry, because otherwise it oxidizes again, that is, rusts, and loses metallization.
Hot DRI (HDRI) is charged directly into the electric arc furnace without cooling. The heat it brings with it reduces the electricity demand during melting.
Hot Briquetted Iron (HBI) is produced when hot DRI is pressed into dense briquettes at a minimum of 650 °C without a binder. The density is at least 5 g/cm³. According to the International Maritime Solid Bulk Cargoes Code (IMSBC Code) of the International Maritime Organization IMO, HBI is classed as a less reactive DRI category and can be stored and shipped over long distances much more safely than loose DRI, which tends toward self-heating.

Distinction from pig iron, scrap and green steel

DRI differs fundamentally from pig iron from the blast furnace. In the blast furnace, iron ore, coke and fluxes are used in a process that combines reduction and melting. The result is liquid pig iron with a relatively high carbon content, which is subsequently processed into steel in the basic oxygen converter. Direct reduction separates these steps: first, iron ore is reduced in the solid state, then the material is usually melted in the electric arc furnace. In some cases a melter is also provided, which again delivers a pig-iron-like product for the converter. This variant is discussed mainly for ores with a higher gangue content.

DRI is also not the same as steel scrap. Scrap is steel that has already been produced and is melted down again. Its use saves ore, reducing agents and many upstream process steps. However, the quantity and quality of available scrap are not sufficient to cover total steel demand. In addition, many high-grade steels require a raw material base with few accompanying elements such as copper. DRI is a comparatively pure iron carrier and can complement the electric arc furnace, which would otherwise depend heavily on scrap.

The term DRI should also not be equated with green steel. DRI describes an intermediate product and a process, not an emissions class. DRI from natural gas can reduce emissions compared with the coal-based blast furnace route, but remains fossil-based. Coal-based DRI from rotary kilns can even cause emissions as high as or higher than the blast furnace route. DRI with renewable hydrogen can achieve very low direct CO₂ emissions. This, however, requires sufficient renewable electricity, electrolysis capacity and suitable industrial infrastructure. Whether the steel produced from it is considered low-carbon or nearly climate-neutral depends on a traceable carbon footprint across the entire process chain.

Why DRI is relevant for the power system

DRI is a key term in industrial policy and energy economics. The conversion of steel production shifts energy demand from the coal and coke system toward electricity, hydrogen and electric melting processes. The order of magnitude can be roughly estimated: in an analysis, Agora Industry calculates around 69 kilograms of hydrogen per tonne of DRI, while other estimates are somewhat lower, at least about 54 kilograms. If roughly 50 to 55 kilowatt-hours of electricity are assumed per kilogram of hydrogen from electrolysis, this results in approximately 2.7 to 3.8 megawatt-hours per tonne of DRI for the hydrogen alone. In addition comes the electricity for melting in the electric arc furnace. This calculation is a rough estimate; actual values depend on the plant, ore and mode of operation.

DRI thus changes the load structure of industrial sites. An integrated steelworks with a blast furnace depends mainly on coal, coke, ore logistics, process gases and continuous thermal operations. A DRI-based route with an electric arc furnace depends more on grid connections, hydrogen availability, storage, supply contracts and the temporal organization of production. The additional electricity consumption counts here not only as an annual quantity. For grids and electricity markets, what matters is when electrolyzers, arc furnaces, compressors, treatment plants and auxiliary units are running. Even the large grid connection of such a site is an infrastructure project in its own right.

An electric arc furnace can cause high power peaks. Depending on their design, electrolyzers can be operated more flexibly, but become uneconomical at low utilization. This creates a practical need for coordination: steelworks need reliable production schedules, power grids need plannable connection and operating concepts, and hydrogen systems need storage or steady offtake profiles. DRI thereby links the industrial process, the power system and the gas infrastructure more closely than the traditional blast furnace route.

Reduction, melting and flexibility

A common misunderstanding is to describe direct reduction as a purely electrical process. The electric arc furnace is electrical. The reduction of the iron ore, however, requires a chemical reducing agent. Hydrogen can take on this role. Electricity alone does not reduce the ore in the DRI routes that are relevant on an industrial scale today; direct electrolytic processes are still under development. Electricity is needed to produce hydrogen, to operate plants and, where applicable, to heat process gases, since reduction with pure hydrogen consumes heat. In addition, electricity is used to melt the reduced iron. This distinction determines which infrastructure must be built and where costs arise.

The flexibility of DRI plants is also often presented too crudely. A steelworks is not a consumer that can be shifted at will. The reduction shaft preferably operates continuously and under stable conditions, because temperature control, material quality, plant wear and production logistics depend on it. At the same time, electrolyzers, a hydrogen storage facility, HBI stockpiles, variable scrap shares and operational planning can create room for maneuver. This flexibility does not arise automatically from the use of hydrogen or electric furnaces. It must be technically designed, contractually secured and reflected in grid and market rules.

For the power system, this difference is essential. An industrial consumer with high, reliable offtake can support investment in renewable generation and grids. Poorly integrated, however, the same consumer can exacerbate local grid bottlenecks or place high demands on firm capacity. DRI plants are therefore not only decarbonization projects of the steel industry, but also new nodes in the energy infrastructure.

Economic, legal and institutional contexts

The economic viability of DRI depends on several markets that do not always send stable signals at the same time. These include the prices of iron ore of suitable quality (DRI pellets mostly require iron-rich ore), of natural gas or hydrogen, electricity, CO₂ allowances, scrap, transport capacity and steel products. Especially important is whether low-carbon steel achieves higher revenues or whether policy instruments bridge the additional costs. Possible instruments are CO₂ pricing, funding programs, carbon contracts for difference (Klimaschutzverträge), quotas or public procurement.

In the EU, DRI is covered in trade law under customs tariff heading CN 7203 as a product of the direct reduction of iron ore and as other spongy ferrous products. It is among the goods to which the CO₂ border adjustment mechanism CBAM applies. For imports of DRI or steel made from it, the (embedded) emissions contained in the product therefore play a role. In the production of DRI, hydrogen is regarded as one possible relevant precursor. The exact obligations, default values and transitional rules change with the design of the CBAM and should be checked for the specific individual case in their current form.

Institutionally, the challenge lies in the fact that investment decisions in steelworks are very long-term, while electricity and hydrogen markets are still being built or restructured. A DRI project needs clarity on grid connection, hydrogen supply, guarantees of origin, permits, funding and future CO₂ rules. One advantage of the route: shaft furnaces can initially be operated with natural gas and gradually switched to higher hydrogen shares. This reduces the risk if hydrogen becomes available later than planned. If planning certainty is lacking, however, a technically plausible conversion can be economically blocked. The cause then lies not in the individual unit, but in the coordination between industrial policy, energy infrastructure and climate regulation.

Siting issues are also changing. Classic steel sites often arose close to coal, ore logistics, ports, rivers or existing industrial clusters. DRI with hydrogen can favor sites where renewable electricity, hydrogen pipelines, storage, ports or large grid connections are available. Because HBI is easy to transport, there is also discussion of relocating reduction to regions with cheap renewable energy and importing HBI as a carrier of bound hydrogen. At the same time, existing workforces, plant networks, customer relationships and regional value creation speak in favor of transforming existing sites. Conflicts arise where technical possibilities, market rules and political responsibilities diverge.

What the term makes visible and what it does not

DRI makes visible that the decarbonization of the steel industry cannot be described solely as the replacement of a fuel. The process changes raw material flows, energy flows, plant concepts and responsibilities. It links ore quality with hydrogen strategy, power grid expansion with industrial production, and CO₂ accounting with trade rules. Anyone looking at DRI therefore sees an interface between the basic materials industry and the future energy system.

However, the term does not by itself explain how climate-friendly a specific steel is. For that, reducing agents, electricity origin, plant efficiencies, material inputs, transport routes and accounting rules must be disclosed. Likewise, DRI alone does not answer the question of security of supply, industrial electricity prices or hydrogen availability. It designates the technical intermediate product and the associated process step, not the complete transformation strategy.

Used precisely, Direct Reduced Iron stands for directly reduced iron as a bridge between iron ore and electric steelmaking. Its significance lies in this intermediate position: DRI does not replace the steel market, does not automatically solve the emissions problem, and does not make the blast furnace dispensable through a single apparatus. It shifts the central reduction step from the coal-based blast furnace route into a process chain. Its climate impact depends on the reducing agent, electricity, infrastructure and industrial organization.

Sources

World DRI production reaches 140.8 Mt in 2024 — Midrex Technologies, Inc.; 2025-08. Abschnitt Midrex Publishes World Direct Reduction Statistic; Verweis auf die Statistik 2025 unter Related reading
Report: Worldwide DRI Production Sets New Record — Association for Iron & Steel Technology (AIST); 2025-08-25. Meldung, Absätze 2–4
The Versatile OBM (Ore-Based Metallic): Part 1 – Everything you ever wanted to know about Direct Reduced Iron — Midrex Technologies, Inc.; unbekannt. Abschnitte Cold DRI, Hot Briquetted Iron, Begriffsdefinitionen
Achieving climate-neutral steel by 2050 — Agora Industry; unbekannt (2024/2025). Abbildungsnotizen zu Wasserstoffpotenzialen; Abschnitt zu DRI-Projekten
Guidance document on CBAM implementation for importers of goods into the EU — Europäische Kommission, GD TAXUD; 2023-11-21. Kapitel 5, Eisen und Stahl: Warenliste und Produktionsrouten

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Edited by eCMS on 11.11.2026 19:09