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Arch Resources Reports Second Quarter 2020 Results

Coal News - Published on Thu, 30 Jul 2020

Image Source: Arch Resources
Arch Resources Inc reported a net loss of USD 49.3 million in the second quarter of 2020, compared with net income of USD 62.8 million in the prior-year period. Revenues totalled USD 319.5 million for the three months ended June 30, 2020, versus USD 570.2 million in the prior-year quarter. Arch's chief executive officer and president Paul A Lang said "The Arch team executed at a high level in the second quarter, quickly adjusting to rapidly changing market conditions while taking extensive steps to protect the safety and health of their communities, their co-workers and themselves. We believe that, with our top-tier metallurgical assets, the company is well-equipped to manage through the current period of global economic disruption, and equally well-positioned to capitalize on the metallurgical market recovery as it takes shape."

Heading2Q201Q20QoQ2Q19YoY
Tons sold (in millions)1.51.8-17%1.9-21%
Coking1.31.5-13%1.6-19%
Thermal0.20.20%0.3-33%
Coal sales per ton sold$76.17 $82.35 -8%$115.87 -34%
Coking$84.26 $92.53 -9%$131.91 -36%
Thermal$18.12 $18.93 -4%$29.05 -38%
Cash cost per ton sold$61.95 $58.42 6%$62.07 0%
Cash margin per ton$14.22 $23.93 -41%$53.80 -74%
 


Market conditions - After a very challenging first half, global steel markets appear to be shifting slowly into recovery mode. While steel prices remain under pressure, steel producers have recently moved to restart select, previously idled blast furnaces, and mill utilization rates are inching up as well, with the average capacity factor at US steel mills approaching 59 percent this past week. Automotive plants, which constitute a core market for high-quality, primary steel, have resumed operations in Europe and North America, and Chinese automotive output was up in May on a year-over-year basis. In fact, the Chinese steel industry, which is the source of more than half the world's steel output, now appears to be in expansion mode, with 2020 steel production on course to exceed 2019 levels, according to the World Steel Association. Meanwhile, coking coal markets remain at depressed levels. While global demand remains muted, sales inquiries appear to be picking up in specific regions. Chinese seaborne coking coal imports, for instance excluding land-based Mongolian shipments, are up nearly 70 percent year-to-date. On the supply side, high-cost production is being rationalized at a fairly brisk pace, particularly in North America, although more cuts will be needed to balance the market. US coking coal production was down an estimated 15 percent in the first quarter of 2020 when compared to the second quarter of 2019, just before coking coal prices started to retrace appreciably. Moreover, Australia is struggling to maintain last year's production levels in the face of weak pricing, operating disruptions at certain mines, and limited capital investment in recent years, and Canadian producers are guiding to significantly lower 2020 production as well.

Thermal markets remain intensely challenging. Arch expects US thermal demand to decline by more than 130 million tons in 2020, following a nearly 100-million-ton decline in 2019. Exacerbating the situation, US power plants hold an estimated four months of inventory in stockpiles at present – likely an all-time high. Arch expects the downward trend in US thermal demand to continue as incremental combined cycle gas and subsidized renewable capacity comes online, and as coal plant retirements continue. At the same time, both Atlantic and Pacific basin export markets remain closed to virtually all US output given current demand and pricing levels

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Posted By : Yogender Pancholi on Thu, 30 Jul 2020
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