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 enhances the price of producing steel via blast furnaces, both in absolute terms and relative to other routes. This typically brings about higher steel prices as raw material cost is passed through. It might also accelerate the green transition in steelmaking as emerging green technologies, for example hydrogen reduction, would be a little more competitive in comparison with established production methods sooner. The need 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, so that they will need to evaluate the expense of emerging technologies, for example hydrogen-based direct reduced iron, and decide to change their blast furnaces.
Increased coke prices would also impact the value-based pricing of iron ore. Prices for different 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 scale back, resulting in higher coke rates inside the blast furnace. Higher coking coal prices improve the cost penalty incurred by steelmakers, leading to high price penalties for low-grade iron ores. This can affect overall iron ore price dynamics in two other ways, depending on the amount of total iron ore demand. In a scenario, if total interest in iron ore might be met solely with high-grade iron ores, chances are that benchmark iron ore prices will continue steady. However, price reductions in price for lower-grade ore would increase significantly, potentially pushing producers on this material out from the market. In an alternative scenario, if low-grade ore can be meet overall demand, both benchmark iron ore prices and discounts could increase significantly, to ensure that low-grade producers would remain in the market because marginal suppliers.
For details about Telf AG go our internet page: click here