Market evolution: Direct reduced iron (CN 720310) — 2015–2025

Introduction

Direct reduced iron (DRI), classified under customs code 720310, is a critical raw material for the steel industry, particularly for electric arc furnace (EAF) production routes that are increasingly favoured for their lower carbon footprint. This report examines the evolution of EU trade in DRI over the period 2015–2025, based on trade data compiled by the Trade Dashboard. Over this decade, the EU has remained overwhelmingly dependent on DRI imports, with a net import reliance that ranged from 84% to nearly 100%. At the same time, the bloc's own production and exports have contracted markedly, while import prices have more than doubled — reshaping the cost structure and sourcing patterns of the European DRI market.

1. A market shaped by rising unit values and declining import volumes

1.1 Import values rose while volumes contracted

Despite a 20.7% decline in imported quantities — from 2.84 million tonnes in 2015 to 2.25 million tonnes in 2025 — the total value of EU DRI imports grew by 25.5%, reaching €676.6 million in 2025. This divergence is entirely explained by a sharp increase in unit prices (see next subsection). The import value peaked at approximately €1.1 billion around 2021–2022, before falling back in subsequent years.

1.2 Import prices more than doubled, peaking around 2021–2022

The average import price of DRI into the EU rose from €190 per tonne in 2015 to €301 per tonne in 2025, an increase of 58.3%. Over the full period, prices reached a minimum of €146/t and a maximum of €376/t. The sharp price escalation was driven by a combination of the global commodity super-cycle in 2021, energy cost inflation, and — critically — the disruption of Russian supply following the 2022 invasion of Ukraine, which triggered sanctions and redirected trade flows. The price shock data confirms this interpretation: the largest detected shocks are price shocks centred on 2021, affecting Russian imports (60.6% shift, 12.2 abnormality score) and Venezuelan imports (76.6% shift, 16.8 abnormality score).

1.3 The trade deficit widened, reflecting structural dependency

The EU's trade deficit in DRI grew from €514 million in 2015 to €675 million in 2025 (a 31.1% increase in absolute terms), after reaching a peak deficit of approximately €1.1 billion around 2021. This widening deficit is the logical consequence of rising import prices combined with a collapse in exports (see Section 2). The EU's net import reliance remained extremely high throughout the period, ranging from 84% to 99.9%, confirming that DRI remains a product the EU is almost entirely unable to source domestically.

2. EU domestic production and exports have collapsed

2.1 Domestic DRI production declined sharply in volume

According to production data, EU production of DRI (in kilograms) fell by 37.5% over the period, from 400,000 kg in 2015 to 250,000 kg in 2025, with a trough of just 800 kg at one point. In value terms, however, production revenues increased by 357.2% — from €32.8 million to €150 million — reflecting the same price inflation observed in imports. This suggests that the remaining EU producers have benefited from higher prices even as their output has contracted.

2.2 EU DRI exports have virtually disappeared

The most dramatic structural shift in this market is the near-total disappearance of EU exports:

Export volumes dropped by 96.1%, from nearly 60,000 tonnes to just 2,327 tonnes. The EU's export propensity collapsed from 34.1% to just 4.0%. Formerly significant export destinations — notably Morocco (from €15.9M to near zero), Algeria (from €2.2M to near zero), and Norway (from €2.6M to €199K, −92.3%) — saw their trade with the EU collapse almost entirely. Among EU Member States, Portugal was once the bloc's largest DRI exporter (€20.6M in 2015) but had ceased exports entirely by 2025.

2.3 Specialisation is concentrated in a few Member States

The specialisation data for 2025 reveals that only three EU countries show a significant revealed comparative advantage (RCA > 1) in DRI: Belgium (RCA 3.61), Poland (RCA 3.60), and the Netherlands (RCA 2.38). Together, these three countries account for the vast majority of the EU's DRI production and trade in this product. By contrast, large economies such as Germany (RCA 0.0004) and Austria (RCA 0.0003) show no meaningful specialisation, suggesting that their significant import volumes are entirely consumed downstream in their steel industries rather than producing DRI domestically.

3. Supplier diversification and geopolitical reshuffling of import sources

3.1 Russia remained the dominant supplier but lost ground

The partner data shows that Russia was by far the EU's largest DRI supplier throughout most of the period, with imports peaking at €681 million at their height. By 2025, Russian imports had declined to €175.5 million — a 28.6% reduction from 2015 levels — though Russia remained the single largest supplier by value. This decline is consistent with the progressive tightening of EU sanctions and trade restrictions following 2022. Notably, Russian supply exhibited relatively low volatility (coefficient of variation of 0.27), suggesting that the reduction was orderly rather than chaotic — consistent with a managed sanctions process rather than a sudden supply disruption.

3.2 Venezuela and Libya emerged as alternative suppliers

To compensate for reduced Russian supply, the EU has increasingly turned to alternative sources:

• Venezuela saw imports grow from €149.5 million to €193.6 million (+29.5%), making it the second-largest supplier by 2025. However, Venezuelan supply is notably volatile (CV of 0.61), reflecting the country's political and economic instability.
• Libya experienced the most dramatic growth among established suppliers, with imports surging from €26.1 million to €86.5 million (+231.9%). Yet Libyan supply is highly volatile (CV of 0.73), posing risks for long-term sourcing strategies.

3.3 The United States emerged as a major new DRI supplier

Perhaps the most striking finding in the partner data is the meteoric rise of US DRI exports to the EU: from virtually zero (€2,450) in 2015 to €171.6 million in 2025 — a 7,000,000% increase. The US is now the EU's third-largest DRI supplier, with supply that is relatively stable (CV of 0.51). This development is likely linked to the expansion of US-based DRI capacity (notably Nucor's plant in Louisiana) and reflects a broader trend of nearshoring and friend-shoring in critical raw materials supply chains.

3.4 Formerly significant suppliers saw sharp declines

Several traditional suppliers have seen their share collapse:

The decline of Trinidad and Tobago is particularly notable, as the country was once the EU's third-largest DRI supplier. This may reflect competitive displacement by US suppliers, given geographical proximity and cost advantages.

3.5 Import concentration decreased while supply geography diversified

The Herfindahl-Hirschman Index (HHI) for imports fell by 24.2% (from 3,263 to 2,472), indicating a meaningful diversification of the EU's import base. While still concentrated (HHI > 2,500 is typically considered "moderately concentrated"), the trend is clearly toward a broader supplier base. This diversification is a deliberate response to supply security concerns, particularly after the geopolitical shocks of 2022.

3.6 Italy and Austria emerged as the EU's primary import gateways

At the Member State level, the reporter data shows a significant reshuffling of which EU countries absorb DRI imports:

• Italy remained the bloc's largest importer throughout, growing from €222 million to €291 million (+31.3%).
• Austria experienced explosive growth, from €6.7 million to €133.4 million (+1,902%), becoming the second-largest importer by 2025.
• Belgium and the Netherlands also grew strongly (from €8.1M to €63.7M and from €3.9M to €51.4M, respectively).
• By contrast, Spain (−53.2%), Germany (−80.4%), and Portugal (−73.0%) saw their DRI imports decline substantially.

This redistribution likely reflects shifts in downstream steelmaking capacity within the EU, with Austrian, Belgian, and Dutch integrated steel facilities ramping up DRI-based production — potentially as part of decarbonisation strategies that replace coal-based blast furnaces with DRI-fed electric arc furnaces.

Conclusion

The EU's DRI market between 2015 and 2025 has been defined by three overarching dynamics: price inflation, supply diversification, and domestic production decline. Import prices more than doubled, transforming what was once a relatively low-cost raw material input into a significantly more expensive one. Simultaneously, the EU's own DRI production and exports have nearly vanished, pushing net import reliance to persistently high levels (84–100%).

Geopolitically, the period witnessed a significant reshuffling of supply sources. Russia's dominant but declining position has been partially offset by the rise of US, Venezuelan, and Libyan suppliers, though the latter two carry higher supply volatility. The emergence of the US as a major DRI supplier is a structurally significant development that may persist, reflecting both capacity investments in North America and the EU's strategic preference for politically stable suppliers.

Within the EU, the geography of DRI consumption has shifted, with Austria, Belgium, and the Netherlands emerging as major importers — a pattern consistent with the steel industry's decarbonisation pivot toward DRI-based EAF production. The concentration of specialisation in Belgium, Poland, and the Netherlands suggests that these countries are positioning themselves as hubs for green steelmaking, a trend likely to intensify as the EU's carbon border adjustment mechanism (CBAM) and climate targets further incentivise DRI over traditional blast-furnace routes.

Overall, the EU faces a fundamental tension: it is becoming more reliant on imported DRI at a time when its strategic priority is to secure domestic supply chains for critical raw materials. Resolving this tension will be one of the defining challenges for European steel policy in the years ahead.