Arch Coal, Inc. today reported net income of $68.4 million in the third quarter of 2017, compared with net income of $37.2 million in the second quarter of 2017.
The company recorded revenues of $613.5 million for the three months ended September 30, 2017, representing a 12 percent sequential increase and reflecting ongoing strength in coking coal pricing as well as overall strong performances from the Powder River Basin and Other Thermal segments, according to a company press release.
Despite difficult mining conditions and rail service issues in the Metallurgical segment, Arch recorded cash margins of $24.14 for the third quarter of 2017 compared to $29.64 for the prior-quarter period. Total coking coal sales reached 1.8 million tons in Q3, compared to 1.5 million in Q2 2017.
According to the press release, in metallurgical coal markets, both demand and pricing for seaborne coking coal remain healthy, even with the ongoing recovery of Australian exports following Cyclone Debbie and modest supply growth elsewhere. Supporting these sound market fundamentals, the company said, global steel and hot metal production continue to expand, with global hot metal demand up 2.3 percent through September and steel prices well above last year's levels in all key regions.
The company also said European metallurgical imports are up solidly year-to-date, and US blast furnace utilization has rebounded in recent months.
Looking ahead, Arch said it believes the outlook for global metallurgical markets is attractive given buoyant steel markets, strong Chinese manufacturing activity, an improving economic outlook in other key countries, and the high cost structure of much of the recently added coking coal supply.
Arch also said it continues to believe that over the long term, global metallurgical markets will find support in the $130 to $150 per metric ton range, which the company believes is a breakeven level for 10 percent or more of global coking coal production capacity.
Based on the company's current expectations regarding production levels at its coking coal operations, Arch has lowered its coking coal sales volume guidance for the year. Arch now expects to sell between 6.6 million tons and 6.8 million tons of coking coal in 2017.