Getting a firm grasp on where the metallurgical coke and coal industry is headed is a daunting challenge. Jim Thompson, the executive director for I.H.S. Markit Coal, has more insight into this segment than most people, having covered the industry for close to 30 years. As one of the key speakers at the upcoming MetCoke World Summit, Mr. Thompson will provide an analysis of the metallurgical coal and coke sector going forward.
In advance of the conference, Thompson answered a couple of questions on key points impacting the sector.
Question: What is the status of the U.S. metallurgical coke and coal sector right now? How about the global scenario? China in particular.
Jim Thompson (JT): Both price and demand have been challenged in recent weeks as markets outside China have weakened. Resilient Chinese demand has helped suppliers navigate otherwise choppy waters. Prices are still relatively high on an historic basis, but US producers likely need to reduce production to mitigate further price erosion. The question is whether demand from China will maintain its strength long enough for other markets to improve, and a trade agreement between the US and China would be most helpful.
Q: What are some of the biggest challenges/hurdles you see for the met coke/coal industry?
JT: As is true on the thermal side of coal industry, capitalization continues to be an issue. Financing for coal projects is limited, and in most cases, the ticket to the dance is expensive. The met market has substantially better access to capital than does the thermal market, but some blue-chip investors simply will not touch coal. So financing and capitalization likely will be challenging for the foreseeable future.
Q: How about opportunities?
JT: The difficulty producers have in financing new coal mines makes it more difficult for the industry to over-produce, even when prices are high, by historic measures. As a result, prices tend to be more resilient in the past. Settlement of recent trade disputes likely would bolster the global economy, which would help met coal demand. US coal producers, specifically, could benefit if a trade deal with China includes some agreement by the Chinese to increase their US coal usage, though such a deal could also have pitfalls. If Australian producers lose market share in China, they could provide fiercer competition for the US in the latter's more natural markets.
Q: What are some of the benefits of attending conferences such as MetCoke.
JT: In a global environment in which geopolitical and economic developments can change markets in the blink of an eye, it is extremely important to stay informed. Events such as this summit provide critical information, keep participants on top of potential developments and provide a clearinghouse for industry thought. The opportunity for participants to network with their peers is also critical, and there still is no substitute for "face" time with others in the business world.
To hear Jim Thompson’s remarks, as well as presentations by key executives with CRU, Tata Steel, Wood Mackenzie, Standard & Poors and the Federal Reserve, among others, make sure to register for the annual MetCoke World summit, which will be Nov. 5-7 in Nashville, TN. Click here (https://www.metcokemarkets.com/metcoke-summit/metcoke_agenda) to learn more about the conference or to register.