Higher-priced coking coal will probably impact the steel industry’s transition to greener production methods as well as the value-based pricing of iron ore. Higher-priced coking coal boosts the expense of producing steel via blast furnaces, in both absolute terms and compared to other routes. This typically brings about higher steel prices as raw material costs are passed through. It would also accelerate saving money transition in steelmaking as emerging green technologies, like hydrogen reduction, would be a little more competitive in contrast to established production methods sooner. The necessity 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 assess the expense of emerging technologies, such as hydrogen-based direct reduced iron, and decide to exchange their blast furnaces.
Increased coke prices would also affect the value-based pricing of iron ore. Prices for various qualities of iron ore products depend on 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 in the blast furnace. Higher coking coal prices improve the cost penalty incurred by steelmakers, leading to higher price penalties for low-grade iron ores. This could affect overall iron ore price dynamics by 50 % other ways, based on the degree of total iron ore demand. In a scenario, if total need for iron ore could be met solely with high-grade iron ores, chances are that benchmark iron ore prices will continue to be steady. However, price reduced prices for lower-grade ore would increase significantly, potentially pushing producers of the material out of the market. In 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 stay in the market because the marginal suppliers.
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