Higher-priced coking coal is likely to impact the steel industry’s transition to greener production methods as well as the value-based pricing of iron ore. Higher-priced coking coal raises the price of producing steel via blast furnaces, in absolute terms and compared to other routes. This typically results in higher steel prices as raw material price is passed through. It could also accelerate saving money 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 requirement 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 should evaluate the expense of emerging technologies, such as hydrogen-based direct reduced iron, and choose to change their blast furnaces.

Increased coke prices would also impact the value-based pricing of iron ore. Prices many 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 want more energy to cut back, resulting in higher coke rates inside the blast furnace. Higher coking coal prices increase the cost penalty suffered by steelmakers, resulting in high price penalties for low-grade iron ores. This might affect overall iron ore price dynamics in two different ways, depending on the degree 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 quite possible that benchmark iron ore prices will continue to be steady. However, price reductions in price for lower-grade ore would increase significantly, potentially pushing producers of this material out of your market. In an alternative scenario, if low-grade ore is required to meet overall demand, both benchmark iron ore prices and discounts could increase significantly, in order that low-grade producers would continue in the market industry because marginal suppliers.

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