Higher-priced coking coal is likely to affect the steel industry’s transition to greener production methods plus the value-based pricing of iron ore. Higher-priced coking coal raises the tariff of producing steel via blast furnaces, in the absolute terms and when compared with other routes. This typically brings about higher steel prices as raw material price is undergone. It would also accelerate saving money transition in steelmaking as emerging green technologies, like hydrogen reduction, would be a little more competitive in comparison with 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, so they really should evaluate the price of emerging technologies, like hydrogen-based direct reduced iron, and judge to switch their blast furnaces.
Increased coke prices would also affect the value-based pricing of iron ore. Prices many different qualities of iron ore products rely upon 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 require more energy to reduce, resulting in higher coke rates inside the blast furnace. Higher coking coal prices improve the cost penalty suffered by steelmakers, ultimately causing higher price penalties for low-grade iron ores. This might affect overall iron ore price dynamics by 50 % various ways, based on the amount of total iron ore demand. In a scenario, if total requirement for 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 of the 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, so that low-grade producers would be in the market industry because the marginal suppliers.
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