April 27, 2018 Read More →

Flat Demand Hits Arch Coal Hard

S&P Global Market Intelligence ($):

Arch Coal Inc.’s stock price took a dive in early trading April 26 after the company said it is pulling back on thermal coal production in the Powder River Basin and ran into operational challenges in its metallurgical coal segment in the first quarter.

Stock in the U.S. thermal and metallurgical coal producer opened at $94.60 per share; shortly after noon shares were down 14% to $81.06. Arch’s first-quarter results were below many analysts’ expectations as the company struggled with stagnant thermal coal markets and operational challenges preventing it from fully taking advantage of the more healthy metallurgical coal market.

Arch’s Black Thunder mine in Wyoming will produce between 62 million and 68 million tons of coal in 2018, down from prior guidance of about 70 million to 80 million tons, Arch said in an April 26 earnings report. The company produced about 70.5 million tons—equivalent to roughly 9.1% of U.S. coal production—from the mine in 2017. In 2014, the mine produced 101 million tons of coal.

“Ongoing uncertainty in future burn forecasts, still-high coal inventory and lower pricing for competing fuel sources led to muted buying activity during the period,” Arch Executive Vice President and COO Paul Lang said on an April 26 earnings call. “This approach will allow us to keep the tons in the ground for future periods rather than sell them for an inadequate return. We believe this measured marketing strategy for our Powder River Basin franchise is in the best long-term interest of the company and the shareholders.”

More ($): Arch Coal Stock Plummets On Announced Volume Reductions, Operational Issues 

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