The steel sector has started to accelerate its efforts to decarbonize, and this is a trend that will continue into coming decades. Hydrogen DRI is the focus, along with Scrap-EAFs that utilize cleaner power. But how will this growth occur? What will regional geographic differences look like? And - most importantly for the coal and coke industry - what does it imply about traditional BF/BOF steelmaking, and what risks are there for global coking coal and coke demand? And how do you position yourself not only to withstand the challenges, but to profit from them?
The market is in a weird spot. Demand seems highly challenged, yet we are sitting at very strong pricing levels compared to historical norms. Clearly supply challenges are a big part - and a critical driver will be just how long-lasting rail issues in Queensland prove to be. But are we starting to feel the impacts of structural tightness that everyone has been predicting for a long time, owing to underinvestment in the sector?
Chinese steel output could probably count as all three! It's certainly number one. We need to keep an eye out for how - and if - China chooses to stimulate its economy. Our concern is that stimulus is already being priced, and if it doesn't eventuate there could be considerable market downside. Secondly, recovery in supply, particularly in Australia. La Nina is now 4 months past, and we should have a lengthy period of good mining conditions. Production is rising, but will it be able to get back to pre La Nina levels, and if so will rail be able to handle that growth? Third, the Russia-Ukraine War. It's almost 1 1/2 years old now, but it's still a critical driver: how will European demand recover, will the energy crisis return with a hot summer and likely cold winter, and how well will Russian coal continue to find its way to market?
The people! Always the people. The talks are always great, but it's having a beer or a coffee with the other attendees that I enjoy the most. Oh, I'm really looking forward to seeing the Ijmuiden Steel Plant - big thanks to Tata for making that happen.
This is a really dynamic time, maybe the most dynamic that I remember. It really feels like we're living in a bit of a different coking coal and coke world to the one of say 2019. Demand is evolving. Suppliers are changing. Flows are being forced to change. And the whole industry is decarbonising. There's never been a more important time to get in front of your counterparties, make some new contacts, and hear other people's views of where things will go from here.
