Pure coal play
SunCoke Energy Inc.
) announced its production estimates for the fourth quarter and
full year 2012. The favorable production can be attributed to the
company's Middletown facility in Ohio, which contributed 153
thousand tons and 602 thousand tons of output during the fourth
quarter and 2012, respectively.
The Middletown facility performed significantly well
registering healthy output growth compared with its fourth
quarter and 2011 output, which stood at 68 thousand tons. The
company clocked aggregate coke making capacity utilization of
101% and 102% in the fourth quarter and 2012, respectively.
SunCoke provides an optimistic projection with output expected
to increase 6.6% in the fourth quarter compared with the year-ago
quarter level. Similarly, 2012 production level is anticipated to
rise 15.4% compared with the 2011 figure.
In terms of volume, SunCoke upped its output estimates to 1.08
million tons for the fourth quarter. For full-year 2012,
production quantity is also expected to tread on the same path
and will surge to 4.3 million tons.
Even though the production from the high-return Jewell Coke
was low at 171 thousand tons in the fourth quarter 2012 compared
with 177 thousand tons achieved in the year-ago quarter, domestic
coke units delivered the major thrust by generating 911 thousand
tons, up from 838 thousand tons produced in the year ago
Likewise, in 2012, Jewell Coke will produce 698 thousand tons
compared to 707 thousand tons generated in 2011. However
increased production of 3,644 thousand tons in the domestic coke
mines compared to3,055 thousand tons in 2011, will more than
offset the output deceleration in Jewell Coke.
Despite ending 2012 with a higher production level, the
company will have to face hardships in 2013 due to increasing
competition from natural gas in domestic markets and softening
demand in overseas market. This is evident from the company's
recent disclosure that its coke making fleet will do moderate
business owing to the continued weak coal price fundamentals.
Reflecting these broad negative near-term triggers, the Zacks
Consensus estimates for the first quarter is expected to decline
by 16.67% year over year to 20 cents. SunCoke currently
retain a short-term Zacks Rank #5 (Strong Sell).
Another operator in the coal domain,
Alpha Natural Resources Inc.
) has also trimmed its metallurgical coal generation expectation
by 3 to 4 million tons annually in response to the tepid market
conditions in the U.S.
With a market capitalization of $1.17 billion, SunCoke Energy
Inc. engages in mining and producing coal in the Americas. It
offers metallurgical and thermal coal used in steelmaking
ALPHA NATRL RES (ANR): Free Stock Analysis
SUNCOKE ENERGY (SXC): Free Stock Analysis
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