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Effects Of Higher-Priced Coke For The Steel And Iron Ore Industries

Higher-priced coking coal probably will affect the steel industry’s transition to greener production methods as well as the value-based pricing of iron ore. Higher-priced coking coal boosts the price of producing steel via blast furnaces, in the absolute terms and relative to other routes. This typically brings about higher steel prices as raw material price is undergone. It will also accelerate saving money transition in steelmaking as emerging green technologies, like hydrogen reduction, would be 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 will need to appraise the expense of emerging technologies, for example hydrogen-based direct reduced iron, and judge to replace their blast furnaces.

Increased coke prices would also get a new value-based pricing of iron ore. Prices for several qualities of iron ore products rely 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 cut back, resulting in higher coke rates from 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 can affect overall iron ore price dynamics in 2 other ways, based on the a higher level total iron ore demand. A single scenario, if total need for iron ore may be met solely with high-grade iron ores, it’s likely that benchmark iron ore prices will continue to be steady. However, price reductions for lower-grade ore would increase significantly, potentially pushing producers on this material from the 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 stay in the marketplace because the marginal suppliers.

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