Higher-priced coking coal is likely to get a new steel industry’s transition to greener production methods and also the value-based pricing of iron ore. Higher-priced coking coal increases the price of producing steel via blast furnaces, in absolute terms and compared to other routes. This typically leads to higher steel prices as raw material prices are passed through. It might also accelerate the hole transition in steelmaking as emerging green technologies, such as hydrogen reduction, would be competitive in comparison with established production methods sooner. The necessity to reline or rebuild blast furnaces roughly every ten to 15 years at a cost that varies between $100 million and $300 million presents steelmakers with clear decision points, so that they should assess the tariff of emerging technologies, like hydrogen-based direct reduced iron, and choose to exchange their blast furnaces.

Increased coke prices would also modify the value-based pricing of iron ore. Prices many different qualities of iron ore products rely upon their iron content along with their chemical (mainly phosphorus, alumina, and silica content) and physical composition (lumps versus fines versus pellets). Lower-quality iron ores require more energy to cut back, bringing about higher coke rates from the blast furnace. Higher coking coal prices increase the cost penalty incurred by steelmakers, ultimately causing high price penalties for low-grade iron ores. This might affect overall iron ore price dynamics in 2 different methods, with respect to the level of total iron ore demand. In a scenario, if total demand for iron ore might be met solely with high-grade iron ores, it’s quite possible that benchmark iron ore prices will stay steady. However, price reduced prices for lower-grade ore would increase significantly, potentially pushing producers of this material out of the market. In a alternative scenario, if low-grade ore can be meet overall demand, both benchmark iron ore prices and discounts could increase significantly, to ensure low-grade producers would continue in the market industry because the marginal suppliers.

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