Arch Resources Rides Wave of High Coal Demand, Sees $89 Million in Third-Quarter Profits

Researched by Industrial Info Resources (Sugar Land, Texas)--U.S. coal producer Arch Resources Incorporated (NYSE:ARCH) (St. Louis, Missouri) saw its financial results swing to a profit of $89.1 million in third-quarter 2021 from a loss of $191.5 million a year earlier, as global demand for coal used in steelmaking skyrocketed. Industrial Info is tracking $66 million worth of Arch projects.

During the just-ended quarter, Arch's coking, or metallurgical, coal sales averaged nearly $138 per ton, compared with $96 per ton in the second quarter, and $75 per ton in third-quarter 2020.

The post-pandemic rebound in global steel production is driving demand and pricing in seaborne coking coal markets, Arch noted in its earnings release. Through August, global steel production was up nearly 11% when compared with 2020 levels, and up more than 6% versus the pre-pandemic year of 2019.

"Meanwhile, global coking coal supply continues to lag, constrained by years of under-investment and long lead times for new mine development," the company said in its earnings press release. "Seaborne coking coal shipments from Australia, the United States and Canada -- the three largest high-quality metallurgical coal exporting countries -- are down an aggregate 20 million metric tons year-to-date when compared to 2019 levels."

Arch is slowly exiting the thermal coal business, but nonetheless saw strong thermal coal earnings from its existing operations. Arch's Powder River Basin mining operation in Wyoming and West Elk mine in Colorado "are now effectively sold out for 2022, at record-high average pricing levels," the company said.

Also during the quarter, Arch said it began production at its new Leer South longwall mine in Barbour County, West Virginia. The mine is projected to produce up to four million tons per year of high-grade metallurgical coal once it fully ramps up in 2022.

Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, six offices in North America and 12 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: Facebook - Twitter - LinkedIn.