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Interview: Jack Porco, Xcoal, President & Chief Commercial Officer

Jack discusses international import opportunities into Poland and why the country is becoming a key prospect for US coal


Interview: Jack Porco, President & Chief Commercial Officer, Xcoal Energy & Resources



1. In your view, what is the biggest challenge for the global coal industry in 2015? 

In my opinion the biggest challenge for the global coal industry in 2015 is the oversupply of both thermal and coking coal. In anticipation of continued growth in demand for both thermal and coking coals, producers expanded production and port capabilities. As these projects are now coming into full production, demand has not kept pace. This is particularly true in China. Chinese imports are down by 26 million metric tons or 45% YTD year through February. Unfortunately the supply / demand balance will not be corrected in 2015.

2. Xcoal supplies US coal to customers all around the world. With so many countries involved in the international market, what makes Poland particularly interesting on the global stage?

We believe the Polish coal market is of particular interest for a number of reasons. Firstly, the Atlantic basin has been the traditional market for USA producers and this will be true for the foreseeable future . On the coking coal side, Poland is the only country in Europe where new coke batteries are being opened. Whereas in many countries in Europe,  coke batteries are being closed, Poland is investing in new ones. On the thermal coal side, Poland has a large domestic market for both power and heat generation, which is predominately coal based. We believe coal generation will maintain its strong position for many years to come. 
Adding to the above, the location is attractive and easy to reach by sea vessel from the United States. Major port investments over the years have made it easier and less costly to import coal into Poland. Furthermore the Polish port infrastructure has the possibility to become an attractive storage/blending distribution centre to neighbouring countries which are land locked.

3. Your presentation at the 3rd Coaltrans Poland will focus on the potential for using coal from the USA in Poland. What opportunities can US coal present for Poland?

There are numerous reasons why Polish consumers should consider coal from the U.S.  US coal producers can provide stable coal qualities and supply. The U.S. has a well established and reliable infrastructure supporting its exports. And as mentioned above these ports are in close proximity to Poland.
The US produces and exports high calorific value thermal coals and a wide range of coking coals, including LV, MV, HV, SSCC, PCI and anthracite.
US coals are low in phosphorus which should be of benefit to Polish consumers and the coking coals have good plastic properties, good cold coke strength and stability.
The US provides a good diversification source for Polish consumers of coal. And lastly, we believe US coals can be competitively delivered into Poland.

4. You have been involved in the coal industry for over 30 years. What is the biggest change you have seen in the industry since you started your career?

I would say there has been a number of major changes over this time period but I will only focus on three.

The first major change has been the make up of both buyers and sellers. On both sides we have experienced significant consolidation and more publicly traded companies. Although the number of participants on both sides are fewer, they are much larger and more "sophisticated", if I may use that word.

The availability and exchange of information has increased significantly over this time period. One has the feeling there are no secrets left in our business. Part of the reason is that many of the companies are publicly traded and therefore they are required to disclose more information than in the past. And at the same time every commercial transaction appears to find its way "into the market."

Perhaps the last point I will make is the short-term nature of our business. At one time buyers and sellers developed long-standing relationships, which translated into more predictable contract volumes and longer-term pricing. This has given way to more short term behaviour both on contract volumes and pricing. Coal is moving closer and closer to becoming commoditized.

I leave it to the readers as to whether the above changes have been beneficial or not.


 

 

This content is provided by Coaltrans Conferences for informational purposes only, and it reflects the market and industry conditions and presenter’s opinions and affiliations available at the time of the presentation.

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