Steel, Not Energy, Is Key to Coal’s Future Growth: Here’s Why

Thermal coal may be facing a permanent retirement in the U.S., but metallurgical coal is on a path to experience robust growth. Analysts believe that while the nation’s energy landscape changes, the demand for metallurgical coal, a vital component in steel production, will persist and even flourish in the coming years.

Understanding the Role of Metallurgical Coal

Metallurgical coal, also known as met coal or coking coal, is crucial for steel manufacturing. As civilizations continue to grow and develop, the need for steel remains ever-present. Omar Sheikh, CEO of New York Energy LLC, emphasizes that “unless the world and society as a whole has built everything it is going to build, coal is still required for steelmaking and will be for the next 20 or so years.”

According to a report from market research firm Straits Research, the global market for metallurgical coal was valued at $15 billion in 2024 and projected to reach $18.4 billion by 2032—a compound annual growth rate of 2.6%. This growth reflects the ongoing importance of steel in various sectors such as construction, infrastructure, transportation, and technology.

Political Climate and Industrial Demand

President Donald Trump’s “America First” agenda aims to reinvigorate coal and fossil fuels as sources of cheap energy while reviving U.S. manufacturing. This political climate has brought renewed attention to the coal industry, though investment opportunities have become more limited. “The onshoring policy,” as described by Toyin Are, founder of Apex Commodity Markets, has the potential to boost steel demand. As manufacturing returns to the U.S., the demand for steel—primarily produced via blast furnaces that use metallurgical coal—will likely increase, and domestic sources will be critical.

The Impact of Executive Action

On April 8, 2025, President Trump issued an executive order emphasizing the importance of increasing domestic energy production, including coal, to enhance national economic prosperity and security. This executive action has the potential to bolster investor sentiment in coal producers and stabilize or even improve U.S. coal demand for power generation and steel production.

Tim Rotolo, CEO of Range Fund Holdings, mentioned that the rhetoric and potential for deregulation could positively impact investor confidence. His company has launched the Range Global Coal Index ETF, which allows investors to gain exposure to a diverse mix of met and thermal coal producers. Even though the ETF saw a decline in value earlier this year, recent inflows have surged, suggesting a renewed investor interest in coal, counterpart to the momentum ignited by Trump’s executive order.

Global Coal Consumption Trends

Global coal usage reached a record high last year at 8.77 billion metric tons, according to the International Energy Agency (IEA). While demand for thermal coal is declining in developed economies due to a shift towards renewable energy and natural gas, metallurgical coal is still tied to robust global steel production, ensuring bright prospects. Emerging economies, particularly India and Southeast Asia, are increasing their infrastructure investments, further boosting metallurgical coal demand.

Despite a general downward trend for thermal coal, Rotolo stated, “It is becoming increasingly clear that the long-term outlook for coal is centered more on met coal rather than thermal coal.” Peabody Energy, the largest coal miner in the U.S., has even acquired steelmaking-coal assets, reiterating the industry’s commitment to metallurgical coal amidst ongoing market challenges.

Challenges Facing Coal

Although Trump’s executive order provided a temporary uplift for coal, experts express skepticism regarding long-term viability. The U.S. is systematically retiring coal power plants to meet environmental goals outlined in the Paris Agreement, which seeks to mitigate greenhouse-gas emissions. The Energy Information Administration reported that 12.3 gigawatts of coal power generation capacity is scheduled for retirement this year, a significant increase compared to previous years, indicating a turbulent future for thermal coal. Even in the absence of federal regulation, natural gas continues to be a more affordable energy alternative, sparking doubts about the future of thermal coal.

However, metallurgical coal holds promise for positive growth. Analysts project that emergent economic cycles, coupled with rebuilding efforts in conflict-affected regions, could further drive demand for metallurgical coal.

Conclusion: A Diverging Path for Coal

In conclusion, while thermal coal’s prevalence is diminishing in key markets, metallurgical coal is projected to witness steady demand fueled by the global need for steel amidst reindustrialization. Investors seeking opportunities in the coal sector should consider the shifting landscape and focus on the potential growth of metallurgical coal as industrial applications expand and economies modernize.