Steel industry develops rapidly in China, The output of steel in this year has exceeded a hundred million tons for 13 years in succession. The output of crude steel was 108 million tons in 2002, 202 million tons in 2003, 250 million tons in 2004, up to 349 million tons in 2005, 400 million tons in 2006, 450 million tons in 2007, and would reach 360 million tons in 2006, among it, plank steel covers 146 million tons, accounting for 93%, and imported 25.82 million tons, while exported 20 million tons, and 500 million tons of steel output is expected in 2008. China has already become the first in the world for steel producing and consumption. But China is not strong steel country, and our steel is not competitive in global market. In variety and quality, we cannot meet the need of development. China has to import more than dozens of million tons of steel (mainly high-quality steel and special steel) every year, and the sponge iron is exactly the only indispensable raw material to solve this problem. With the constant improvement of the requirement to steel products' variety and quality, according to adjusting the steel products' structure and improving the market competitive, it is imperative to develop electric stove steelmaking. The capital cost and production cost of electric stove steelmaking are low, the construction period is short, and the technology is developing fast. With the constant improvement of the requirement to steel products' quality, the strictness required in ecological environment protection, and sufficient supply of electric power, the development of short procedure of electric stove must be promoted, the capacity of electric stove steelmaking will be increased rapidly, so the shortage of scrap steel will aggravate further like this. To replace scrap steel by pig iron will prolong the duration of electric stove smelting, increase the consumption of oxygen, and reduce the lifetime of the electric stove. To use direct reduced iron (sponge iron) instead of scrap steel will be an inevitable result.
Direct reduced iron (sponge iron) process has entered a stage that with ripe technology and steady development in the world. For its steady composition, low content of harmful element especially the metal impurity which is difficult to be oxidized, and uniform granularity, direct reduced steel (sponge steel) can supply a want of scrap steel in our country. As the raw material for electric stove steelmaking and the reducer for converter steelmaking, direct reduced steel (sponge steel) plays an irreplaceable role for guaranteeing the quality of steel especially the alloy steel in our country, it is the high-quality raw material. To accelerate the development of direct reduced iron (sponge iron) industry admits of no delay, it adapts to product structure in our country
Manufacturing of direct reduced iron (sponge iron) develops rapidly, its prospect is optimistic. In 1980, the output of direct reduced iron (sponge iron) is only 7.28million tons in the world, it rose to 37.09 million tons in 1998. Around the globe, the output of direct reduced iron (sponge iron) increases by 10.42% each year, it was 40.51 million tons in 2001, 43 million tons in 2002, 49.5 million tons in 2003, 54.6 million tons in 2004, 60 million tons in 2005, 65 million tons in 2006, and 6,730,000 tons in 2007,.and 70 million tons in 2008. India accounted for 15 million tons, increasing 16.6%, Venezuela for 8.69 million, increasing 11%, Iran for 6.87 million, increasing 6.8%, Mexico for 5.85 million, decreasing 7.9%. Comparing them, China has low capacity, 800,000 tons per year in 2007, 300,000 tons in 2002, 350,000 tons in 2003, 400,000 tons in 2004, 430,000 tons in 2005 , 500,000 tons in 2006, and 550,000 tons in 2007 , and 600,000 tons in 2008. On the report of World Metallurgy Industry, China DRI output is zero. In September, 2007, Mr. Jiang Zemin, General Secretary of China, visited DRI plant in Australia, which had shown how important China takes it. In 1995, DRI project was listed as encouraged foreign investment. In 2004 and 2005, DRI was listed as the encouraged project by National Development and Reform Ministry and Commerce Ministry.
While moving towards the steel power, it is the only road to develop direct reduced iron (sponge iron) industry. In our country, the first process of direct reduced iron (sponge iron) is coal based method, among this, Coal based AMR-CBI Process and Tunnel Oven Process are the advanced, reliable, and economic process.