Smithers Apex: As a member of the advisory board you have been very involved in developing the agenda, what are the key themes for this year?
Jim Truman: On the market side, there should be a specific interest in how long coal prices will stay at their lofty position, whether China’s winter policy will have a larger impact on demand than it did last winter and how the Australian rail maintenance issue will resolve. On the technical side, we are always looking for discussions on methods that have allowed coke makers to streamline operations and reduce costs without compromising the quality of the coke being produced.
Also, the vision of the industry structure in 20 to 25 years is important to our current positioning. And who knows, by the time of the meeting other important factors for discussion may emerge, which we will try to touch on.
Smithers Apex: What are the hot topics in the North American coke and coal industry right now?
Jim Truman: The largest issues for North American coke and coal center around the 232 steel tariffs and retaliation imposed by other countries. The direct impact of the tariff is for lowered steel imports, which would be replaced by new domestic production - requiring more raw materials. As most US production of steel is higher cost than the volumes that were imported, upwards pressure on steel prices is another outcome. However, retaliation by other countries against various US products will put some downward drag on manufacturing and the US economy, muting that potential growth.
Smithers Apex: What are the latest changing market factors and trends?
Jim Truman: The reenergized market in the US caused by steel tariffs is the most significant event. Steel capacity utilization rates have increased due to the recent healthy demand, edging close to 80%. And to keep it interesting, this situation is evolving just as steel producers and coal companies are negotiating domestic contracts for 2019 coal requirements.
There is a lot of regulatory development in the US at the moment, can you give our audience a quick summary of the headline developments and what we can expect going forward.
In addition to the steel tariffs, the likely replacement of the Obama-era Clean Power Plan ruling will impact the coal industry. Although the direct impact will be felt at power plants and thermal coal, many metallurgical coal producers offer both products. Therefore, most rulings with positive implications for thermal coal improve the overall outlook for the coal market and bottom line for producers.
Smithers Apex: Demand and pricing and projection of coal volumes is once again a key issue, how is production and blending driving innovation in the industry?
Jim Truman: When coal prices are strong, coke makers look for ways to avoid buying as much premium coking coals. As of this writing, with international prices for low-volatile coal in the range of US$190/t, utilizing more lower quality coals can lead to significant savings. Research in using higher percentages of these type coals has been a priority for quite some time, leading to Scope 21 at Nippon Steel & Sumitomo Metal and high percentages in blends at POSCO to name just a few.
Smithers Apex: What are you looking forward to most about the agenda?
Jim Truman: We aim to provide a balance between market oriented presentations and technical papers. My research is focused within the market side of our industry; so I am most interested in issues that would cause changes in prices and trade patterns. As always, the role China and India play in seaborne demand and the global trade is critical to not only current pricing, but also the timing of new project development.
In addition to the agenda, my highest priority is catching up with the other delegates at the conference. I look forward to being there.