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Xcoal Energy & Resources Interview

Ahead of Eurocoke Summit, we spoke to Jack Porco, President & CCO of Xcoal Energy & Resources, to get the inside track on drivers that lead to sustainably high coking coal prices, future significant industry shifts, challenges faced by the global metallurgical industry when tacking climate change, and much more.


Q. What are some key updates that you will be sharing during your keynote address on Day 2?

I will assess the current coking coal market backdrop and share my comments on where the market goes from here.  Coking coal prices have averaged over US$200/MT for the past two years amid growing demand with global economic expansion, and continually tight supplies.  How long will the good times last?  When will supply finally react to these sustainable high prices in a meaningful way?  How will ‘trade wars’ impact coal?  I’ll share my thoughts on all of the above.

Q. What are some top drivers that lead to sustainably high coking coal prices?  

First and foremost is global economic growth that boosted steel demand just as China’s steel exports were falling.  This caused steel prices to rise and steel producers to increase production at their profits grew.  Coking coal prices cannot be sustainably high without profitable steel producers, so the strong steel market backdrop is the most important driver.

On the supply side, the biggest driver is the under-investment in sustaining existing supply, let alone new supply, that occurred during the 2012 – 2016 price decline.  Mines globally were stripped of capital, reserves were ‘high graded’, and development projects ground to a halt as higher cost mines closed.  This left the supply base very fragile, and unable to respond to higher prices.  The supply base is still playing ‘catch up’ on capital, which has supported high prices and a tight backdrop.

Q. What do you see as the most significant shifts in coal, coke and steel in the short-and mid-terms?

On coal, the market continues to grapple with reserve depletion and the reality that many of the mines that closed during the 2012 – 2016 downturn will never reopen. 

On coke, unless there is a renewed wave of investment in new batteries in Western markets, the reliance on imported coke from China or other merchant coke suppliers will grow.

On steel, I think the market is still adjusting to the impact tariffs are having on trade flows. 

For all three, China’s participation in the seaborne market (imports of coking coal, and exports of coke and steel) will have a dramatic effect on each of those markets. 

Q. What are the main challenges for the global metallurgical industry to tackle climate change?

The growing attention on the sustainability of business is a necessary one, particularly in light of the impact various industries have on our environment.  If coal, coke, and steel are not produced in a sustainable way that allows future generations to benefit from the economic benefits they provide, more attention must be placed on improvements that can be made to those processes.  The environmental focus should be the same in all markets to create a level playing field.