Higher-priced coking coal is likely to get a new steel industry’s transition to greener production methods and also the value-based pricing of iron ore. Higher-priced coking coal boosts the price of producing steel via blast furnaces, in absolute terms and compared to other routes. This typically leads to higher steel prices as raw material price is undergone. It could also accelerate saving money transition in steelmaking as emerging green technologies, like hydrogen reduction, would are more competitive in contrast to established production methods sooner. The need to reline or rebuild blast furnaces roughly every ten to 15 years at a cost that varies between $100 million and $300 million presents steelmakers with clear decision points, in order that they will have to evaluate the cost of emerging technologies, such as hydrogen-based direct reduced iron, and judge to change their blast furnaces.
Increased coke prices would also affect 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 want more energy to reduce, bringing about higher coke rates from the blast furnace. Higher coking coal prices raise 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 % various ways, with respect to the degree of total iron ore demand. In a single scenario, if total need for iron ore may be met solely with high-grade iron ores, chances are that benchmark iron ore prices will stay steady. However, price reduced prices for lower-grade ore would increase significantly, potentially pushing producers of this material out of your market. Within 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 that low-grade producers would be in the market industry because the marginal suppliers.
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