Arch Coal, Inc. today reported net income of $43.3 million in the second quarter of 2018, compared with net income of $37.2 million in the prior-year period.
In the Metallurgical segment, coking coal sales volumes increased 13 percent when compared with the first quarter of 2018, benefitting from improved rail performance, favorable timing on export loadings at the end of the quarter, and solid execution on the two scheduled longwall moves at Leer and Mountain Laurel, the company said in a press release.
Average coking coal realizations declined 10 percent over the same time period due to lower pricing on index-linked and negotiated tons that priced during the period. Segment cash cost per ton for the second quarter declined 10 percent versus the prior-quarter period, driven by increased sales volumes, improved cost performance at Mountain Laurel and strong cost control from other operations in the segment. As a result, Arch recorded a second quarter metallurgical cash margin per ton of $43.05.
The company said coking coal markets appear to be in healthy balance, underpinned by a strong global economy and robust steel markets, adding that seaborne coking coal demand remains buoyant as well, with lower Chinese purchases being offset by increased Indian buying. Given continued rapid growth in its steel sector, Arch said India could soon rival China as a major buyer of seaborne coking coal.
On the supply side, investment in new global coking coal production remains muted, while a number of existing operations continue to struggle with a range of geologic and logistics-related issues that have dampened a supply response, according to Arch.
For full year 2018, Arch still expects to sell between 6.3 million and 6.7 million tons of coking coal. At the midpoint of its volume guidance level, and inclusive of new commitments made during the second quarter, Arch is approximately 91-percent committed on coking coal sales, with 25 percent of that committed volume exposed to index-based pricing.