Higher-priced coking coal is likely to impact the steel industry’s transition to greener production methods and also the value-based pricing of iron ore. Higher-priced coking coal enhances the cost of producing steel via blast furnaces, in absolute terms and relative to other routes. This typically results in higher steel prices as raw material costs are passed through. It will also accelerate the pin transition in steelmaking as emerging green technologies, for example hydrogen reduction, would become more competitive compared with established production methods sooner. The call 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, in order that they should measure the tariff of emerging technologies, like hydrogen-based direct reduced iron, and choose to exchange their blast furnaces.
Increased coke prices would also modify the value-based pricing of iron ore. Prices for several 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 cut back, leading to higher coke rates in the blast furnace. Higher coking coal prices increase the cost penalty suffered by steelmakers, resulting in higher price penalties for low-grade iron ores. This could affect overall iron ore price dynamics by 50 percent various ways, depending on the a higher level total iron ore demand. In a scenario, if total interest in iron ore may 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 with this material from the market. Within an alternative scenario, if low-grade ore is required to meet overall demand, both benchmark iron ore prices and discounts could increase significantly, so that low-grade producers would be in industry because the marginal suppliers.
To learn more about Kondrashov check out the best website: visit here