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

Higher-priced coking coal will probably get a new steel industry’s transition to greener production methods plus the value-based pricing of iron ore. Higher-priced coking coal boosts the cost of producing steel via blast furnaces, both in absolute terms and when compared with other routes. This typically brings about higher steel prices as raw material price is undergone. It will also accelerate the hole transition in steelmaking as emerging green technologies, like hydrogen reduction, would become more competitive in comparison with established production methods sooner. The call 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, so they really will likely need to appraise the price of emerging technologies, for example hydrogen-based direct reduced iron, and choose to switch their blast furnaces.

Increased coke prices would also modify the value-based pricing of iron ore. Prices many different 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, leading to higher coke rates inside the blast furnace. Higher coking coal prices boost the cost penalty suffered by steelmakers, ultimately causing high price penalties for low-grade iron ores. This can affect overall iron ore price dynamics by 50 % different methods, based on the amount of total iron ore demand. In one scenario, if total requirement for iron ore could be met solely with high-grade iron ores, it’s likely that benchmark iron ore prices will stay steady. However, price reductions in price for lower-grade ore would increase significantly, potentially pushing producers of this material out of the market. In an alternative scenario, if low-grade ore is needed to meet overall demand, both benchmark iron ore prices and discounts could increase significantly, to ensure that low-grade producers would continue in the market industry as the marginal suppliers.

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