Higher-priced coking coal will probably 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 absolute terms and compared to other routes. This typically contributes to higher steel prices as raw material costs are passed through. It could also accelerate the hole transition in steelmaking as emerging green technologies, like hydrogen reduction, would are more competitive compared with established production methods sooner. The call to reline or rebuild blast furnaces roughly every ten to fifteen years at a price that varies between $100 million and $300 million presents steelmakers with clear decision points, in order that they will need to assess the tariff of emerging technologies, including hydrogen-based direct reduced iron, and judge to change their blast furnaces.
Increased coke prices would also get a new value-based pricing of iron ore. Prices for various qualities of iron ore products depend upon their iron content in addition to their chemical (mainly phosphorus, alumina, and silica content) and physical composition (lumps versus fines versus pellets). Lower-quality iron ores want more energy to scale back, bringing about higher coke rates in the blast furnace. Higher coking coal prices improve the cost penalty incurred by steelmakers, ultimately causing high price penalties for low-grade iron ores. This might affect overall iron ore price dynamics in 2 other ways, based on the level of total iron ore demand. In one scenario, if total need for iron ore may be met solely with high-grade iron ores, it is likely that benchmark iron ore prices will continue to be steady. However, price reductions for lower-grade ore would increase significantly, potentially pushing producers with this material from the market. Within an alternative scenario, if low-grade ore is needed to meet overall demand, both benchmark iron ore prices and discounts could increase significantly, in order that low-grade producers would be in the market because the marginal suppliers.
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