Metallurgical Coke Market Trends

Growth Drivers

• Rising usage of steel in the automotive sector: The automobile industry poses a high demand for light-duty body-in-white (BiW) steel. For instance, the steel typically sourced from U.S. mills is used for automotive manufacturing. Across the 15 local automakers, approximately 3.9 million tons were used to build the BiWs of all LDVs developed in the country in 2023. This value represents the steel that contributes to the final assembly of BiWs.

  U.S. Light-Duty Body-in-White Steel Demand by Automakers, in 2024

  Automakers	Demand for BiW steel (Million Kg)	Market Share (%)
  General Motors	796	20.3
  Stellantis	463	11.8
  Ford	441	11.2
  Toyota	438	11.2
  Honda	424	10.8
  Hyundai	344	8.8
  Nissan	267	6.8
  Subaru	173	4.4
  Mercedes-Benz	172	4.4
  Others	410	10.4

  Source: The International Council on Clean Transportation (ICCT)

  The production of green steel with green hydrogen is presently limited in the U.S., as per the ICCT report. If U.S. automobile manufacturers switch to green steel, the 3.9 million tons (Mt) LDV BiWs capacity plants can be retrofitted to produce green steel. Moreover, there is a massive potential to decarbonize the current steel industry. In 2023, U.S. LDV, heavy-duty vehicles, medium-duty vehicles, and two-wheelers developers collectively used about 14% or 11 Mt of domestically sourced steel, implying that at least another 7 Mt of automotive steel can be decarbonized beyond what is used for LDV BiWs.
  
  As vehicle sizes increase, total vehicle costs typically rise at a faster rate than the cost of green steel. This means that the premium for using green steel in the BiW does not necessarily represent a larger percentage of the manufacturer's suggested retail price (MSRP) for larger vehicle classes. January 2024 MSRP comparison based on vehicle class BiW green steel cost premium, denotes an average car MSRP of USD 35,724 and a cost premium of USD 167 (0.47%), trucks have a USD 50,016 average MSRP and a cost premium of USD 124 (0.25%), and SUVs have USD 43,616 average MSRP and a cost premium of USD 206 (0.47%).
  
  The Inflation Reduction Act (IRA) of 2022 renders tax credits to incentivize green hydrogen adoption. The H2-DRI-EAF green steel generation, in its most carbon-efficient mode, utilizes renewable electricity to supply green hydrogen via electrolysis. This green hydrogen is then used to reduce iron ore, which is further processed into steel. As a result, this pathway qualifies for both the Clean Hydrogen Production Tax Credit and the Renewable Electricity Production Tax Credit. Furthermore, the European Union (EU) produces an average of USD 200.6 billion worth of finished steel each year, amounting to around 140 million tons. The steel industry in the EU is comprised of 500 production sites across 22 EU Member States. This sector directly employs 303,000 people and is responsible for up to 2.27 million indirect jobs.
   
• Massive boom in worldwide coke trade: In 2023, coke was the 332^nd most traded item, accounting for USD 11.3 billion in value and representing 0.05% in share among all other products. The key exporters included China (USD 2.48 billion), Poland (USD 2.37 billion), Colombia (USD 1.3 billion), The U.S. (USD 642 million), and Australia (USD 584 million). Whereas, India (USD 1.68 billion), Brazil (USD 1.54 billion), Germany (USD 1.06 billion), UK (USD 650 million), and Indonesia (USD 623 million) emerged as the top five importers in 2023, as per OEC.

Challenge

• High competition from alternative materials in the steelmaking sector: Agricultural waste is a valuable resource since it can be turned into carbon material that can be used as a substitute for coke in steelmaking applications owing to its environmental friendliness and low greenhouse gas (GHG) emissions. This may impact the demand for metallurgical coke a substance that comes from fossil fuels as numerous studies have looked into finding a possible substitute-reducing agent to replace the supply of coke, given the environmental concerns since it is the primary cause of CO2 emissions in steel mills.