Higher-priced coking coal may well modify the steel industry’s transition to greener production methods as well as the value-based pricing of iron ore. Higher-priced coking coal increases the cost of producing steel via blast furnaces, in the absolute terms and compared to other routes. This typically contributes to higher steel prices as raw material costs are undergone. It might also accelerate the green transition in steelmaking as emerging green technologies, like hydrogen reduction, would be competitive weighed against established production methods sooner. The call to reline or rebuild blast furnaces roughly every ten to 15 years at a price that varies between $100 million and $300 million presents steelmakers with clear decision points, in order that they will likely need to measure the price of emerging technologies, such as hydrogen-based direct reduced iron, and select to change 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 upon their iron content and chemical (mainly phosphorus, alumina, and silica content) and physical composition (lumps versus fines versus pellets). Lower-quality iron ores require more energy to lessen, leading to higher coke rates inside the blast furnace. Higher coking coal prices boost the cost penalty incurred by steelmakers, leading to higher price penalties for low-grade iron ores. This may affect overall iron ore price dynamics by 50 % different methods, with regards to the level of total iron ore demand. In a scenario, if total need for iron ore can be met solely with high-grade iron ores, chances are that benchmark iron ore prices will continue steady. However, price reductions for lower-grade ore would increase significantly, potentially pushing producers with this material from the market. In an alternative scenario, if low-grade ore is needed to meet overall demand, both benchmark iron ore prices and discounts could increase significantly, to ensure low-grade producers would be in the market as the marginal suppliers.
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