Higher-priced coking coal probably will affect the steel industry’s transition to greener production methods plus the value-based pricing of iron ore. Higher-priced coking coal enhances the tariff of producing steel via blast furnaces, in the absolute terms and when compared with other routes. This typically leads to higher steel prices as raw material prices are undergone. It could also accelerate the green transition in steelmaking as emerging green technologies, like hydrogen reduction, would are more competitive in comparison with established production methods sooner. The requirement to reline or rebuild blast furnaces roughly every ten to fifteen years at a cost that varies between $100 million and $300 million presents steelmakers with clear decision points, in order that they will likely need to evaluate the expense of emerging technologies, such as hydrogen-based direct reduced iron, and select to exchange their blast furnaces.

Increased coke prices would also get a new value-based pricing of iron ore. Prices for different qualities of iron ore products rely on their iron content in addition to their chemical (mainly phosphorus, alumina, and silica content) and physical composition (lumps versus fines versus pellets). Lower-quality iron ores want more energy to cut back, bringing about higher coke rates inside the blast furnace. Higher coking coal prices improve the cost penalty suffered by steelmakers, ultimately causing higher price penalties for low-grade iron ores. This can affect overall iron ore price dynamics in two other ways, based on the level of total iron ore demand. In a single scenario, if total requirement for iron ore can be met solely with high-grade iron ores, it is likely that benchmark iron ore prices will stay steady. However, price reductions for lower-grade ore would increase significantly, potentially pushing producers of this material from the market. Within an alternative scenario, if low-grade ore is necessary to meet overall demand, both benchmark iron ore prices and discounts could increase significantly, to ensure low-grade producers would remain in the market industry because marginal suppliers.

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