Key Numbers
• Global DRI Production (May 2026): 9.75 Million Tonnes
• Year-on-Year Change: -17.5%
• Month-on-Month Change: +9.8%
• January-May 2026 Production: 47.12 Million Tonnes
• Five-Month Change: -8.7% YoY
• India's DRI Production: 5.19 Million Tonnes
• Iran's DRI Production: 1.50 Million Tonnes
• Russia's DRI Production: 0.92 Million Tonnes
• Mexico's DRI Production: 0.61 Million Tonnes
Market Analysis
Global DRI Market Loses Momentum After a Strong Start to the Year
Global direct reduced iron (DRI) production declined sharply in May 2026, highlighting the challenges currently facing the steel industry. According to the latest data released by the World Steel Association, the 12 reporting countries, which account for nearly 85 percent of global DRI production, produced 9.75 million tonnes during May. Although production recovered nearly 10 percent from April levels, it remained 17.5 percent lower than the corresponding month last year. During the first five months of 2026, cumulative DRI production stood at 47.12 million tonnes, down 8.7 percent year on year, indicating that the slowdown has extended beyond a single month.
The decline comes at a time when global steel producers continue to face weak demand in several mature economies, volatile energy prices and geopolitical uncertainty. While DRI is increasingly viewed as a critical feedstock for lower-carbon steelmaking, production levels continue to reflect broader steel demand rather than long-term decarbonisation ambitions alone. The latest figures suggest that investment in green steel technologies remains intact, but utilization levels are currently being influenced by softer market conditions.
India Continues to Dominate Global DRI Production
Despite the decline in global production, India retained its position as the world's largest DRI producer by a significant margin. The country produced 5.19 million tonnes during May, accounting for more than half of the total output reported by the participating nations. Iran remained the second-largest producer with 1.50 million tonnes, followed by Russia at 920,000 tonnes and Mexico at 605,000 tonnes.
India's continued leadership is supported by its extensive coal-based DRI industry, expanding secondary steel sector and sustained domestic steel demand. Unlike several mature markets where DRI production is largely export-oriented, India's production is primarily consumed domestically by electric arc furnaces and induction furnaces. This provides a relatively stable demand base even during periods of global market volatility.
DRI Is Becoming Increasingly Important for Green Steel
Direct reduced iron has emerged as one of the most important raw materials in the global transition towards cleaner steelmaking. Unlike conventional blast furnace production, DRI can be used in electric arc furnaces, significantly reducing carbon emissions when combined with renewable electricity or hydrogen-based reduction technologies. As governments and steel producers accelerate decarbonisation strategies, DRI demand is expected to increase steadily over the coming decades.
However, the latest production figures demonstrate that the industry's long-term growth trajectory will not always follow a straight line. Economic slowdowns, fluctuating energy costs and steel demand cycles continue to influence short-term production decisions. While global output has softened in recent months, the structural outlook for DRI remains positive as more steelmakers invest in low-emission production routes.
India's Steel Expansion Supports Long-Term DRI Demand
India's ambitious steel capacity expansion plans continue to provide a strong foundation for future DRI consumption. The country is targeting 300 million tonnes of steelmaking capacity by 2030, while domestic crude steel production and finished steel consumption continue to register healthy growth. Recent capacity additions by major steel producers and sustained infrastructure spending indicate that metallic demand will remain robust over the coming years.
As electric arc furnace capacity expands alongside traditional blast furnace operations, DRI will become an increasingly important metallic input. This positions India favourably, not only as the world's largest producer but also as one of the fastest-growing consumers of direct reduced iron.
Global Producers Face Mixed Market Conditions
Outside India, the DRI market continues to face varying regional challenges. Natural gas-based producers in the Middle East remain sensitive to energy prices and export market conditions, while European producers continue balancing decarbonisation investments with weak steel demand. Russia and Mexico have also witnessed fluctuations in production as domestic consumption and export opportunities evolve.
These regional differences explain why global DRI production has weakened even as several countries continue announcing investments in hydrogen-based reduction technologies. The long-term transition toward green steel remains firmly underway, but near-term production continues to be influenced by commercial realities rather than technology adoption alone.
What This Means for the Steel Industry
For steel producers, the latest DRI data reinforces two important trends. First, India continues strengthening its position as the global centre of DRI production, supported by expanding steel capacity and strong domestic demand. Second, the global transition towards lower-carbon steelmaking remains a long-term structural trend despite short-term fluctuations in production volumes.
Companies involved in iron ore beneficiation, pellet production, natural gas, renewable energy and electric arc furnace technologies are likely to benefit as DRI assumes a larger role in future steelmaking. The latest decline therefore reflects current market conditions rather than a weakening of the industry's long-term direction.
Industry Impact
Although global DRI production declined sharply in May, India's continued dominance highlights the country's growing strategic importance in the evolving steel industry. As the global steel sector gradually shifts towards lower-carbon production routes, India's strong DRI ecosystem is expected to become an increasingly valuable competitive advantage.
The data also suggests that future investments across the steel value chain will extend beyond crude steel capacity to include pellets, beneficiation, renewable energy and advanced DRI technologies.
Outlook
The near-term outlook for global DRI production will largely depend on steel demand recovery, energy prices and industrial activity across major producing regions. While production volumes may remain volatile over the coming months, long-term demand is expected to strengthen as decarbonisation initiatives gather pace.
For India, the outlook remains particularly positive. Strong domestic steel demand, expanding capacity and leadership in DRI production position the country to play an even larger role in supplying the metallic feedstock required for the next generation of low-carbon steelmaking.