Higher-priced coking coal probably will impact the steel industry’s transition to greener production methods along with the value-based pricing of iron ore. Higher-priced coking coal enhances the price of producing steel via blast furnaces, both in absolute terms and relative to other routes. This typically results in higher steel prices as raw material price is undergone. It will also accelerate the hole transition in steelmaking as emerging green technologies, for example hydrogen reduction, would be competitive in contrast to established production methods sooner. The necessity 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, so they will have to evaluate the tariff of emerging technologies, like hydrogen-based direct reduced iron, and choose to replace their blast furnaces.

Increased coke prices would also impact the value-based pricing of iron ore. Prices for different qualities of iron ore products depend on their iron content as well as their chemical (mainly phosphorus, alumina, and silica content) and physical composition (lumps versus fines versus pellets). Lower-quality iron ores require more energy to scale back, bringing about higher coke rates inside the blast furnace. Higher coking coal prices increase the cost penalty suffered by steelmakers, leading to higher price penalties for low-grade iron ores. This might affect overall iron ore price dynamics by 50 % other ways, with respect to the level of total iron ore demand. In a single scenario, if total requirement for iron ore could be met solely with high-grade iron ores, it’s quite possible that benchmark iron ore prices will stay steady. However, price reduced prices for lower-grade ore would increase significantly, potentially pushing producers with this material from the market. Within an alternative scenario, if low-grade ore can be meet overall demand, both benchmark iron ore prices and discounts could increase significantly, to ensure that low-grade producers would remain in the marketplace because marginal suppliers.

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