Higher-priced coking coal will probably modify the steel industry’s transition to greener production methods plus the value-based pricing of iron ore. Higher-priced coking coal increases the cost of producing steel via blast furnaces, both in absolute terms and when compared with other routes. This typically brings about higher steel prices as raw material costs are undergone. It will also accelerate saving money transition in steelmaking as emerging green technologies, like hydrogen reduction, would be a little more competitive compared with established production methods sooner. The requirement 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 they really will have to measure the price of emerging technologies, like hydrogen-based direct reduced iron, and decide to switch 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 as well as their chemical (mainly phosphorus, alumina, and silica content) and physical composition (lumps versus fines versus pellets). Lower-quality iron ores want more energy to lessen, ultimately causing higher coke rates inside the blast furnace. Higher coking coal prices improve the cost penalty suffered by steelmakers, leading to high price penalties for low-grade iron ores. This can affect overall iron ore price dynamics in two different methods, depending on the amount of total iron ore demand. A single scenario, if total demand for iron ore could be met solely with high-grade iron ores, it’s 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 out of the market. In the alternative scenario, if low-grade ore is required to meet overall demand, both benchmark iron ore prices and discounts could increase significantly, to ensure that low-grade producers would continue in the marketplace since the marginal suppliers.

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