Higher-priced coking coal will probably modify the steel industry’s transition to greener production methods plus the value-based pricing of iron ore. Higher-priced coking coal boosts the tariff of producing steel via blast furnaces, in the absolute terms and when compared with other routes. This typically results in higher steel prices as raw material costs are passed through. It could also accelerate saving money transition in steelmaking as emerging green technologies, including hydrogen reduction, would be competitive compared with established production methods sooner. The need 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, so that they will have to appraise the cost of emerging technologies, such as hydrogen-based direct reduced iron, and decide to exchange their blast furnaces.

Increased coke prices would also get a new value-based pricing of iron ore. Prices many different qualities of iron ore products rely upon their iron content and 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, resulting in higher coke rates from the blast furnace. Higher coking coal prices raise 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 various ways, with regards to the level of total iron ore demand. In a single scenario, if total demand for iron ore could 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 with this material out of the market. In an alternative scenario, if low-grade ore is required to meet overall demand, both benchmark iron ore prices and discounts could increase significantly, in order that low-grade producers would be in the marketplace because marginal suppliers.

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