SunCoke Energy Inc.
) disclosed its preliminary second quarter 2013 domestic coke
production figure, which slipped moderately by 1.3% to 1,081
thousand tons from 1,095 thousand tons in the year-ago
The decline in output is attributed to lower production
activities in the company's Indiana Harbor coke making plant.
Domestic capacity utilization declined to 102% in the second
quarter from 104% in the year-earlier period. We note that the
Indiana Harbor facility, which is currently undergoing major
upgrades, also saw lower production in the first quarter.
However, strong second quarter production from the Middletown
and Haverhill plants somewhat countered the decelerating output.
Combined coke production at the Haverhill and Middletown
facilities registered a 3% increase to 455 thousand tons compared
with 443 thousand tons in the second quarter 2012.
The facilities also saw a jump in capacity utilization rates
to 110% in the second quarter from 108% in the year-ago period.
SunCoke Energy Partners, L.P., which owns a 65% interest in the
Haverhill and Middletown complexes contributed 296 thousand tons
to overall production, up 3% from the corresponding year-ago
SunCoke Energy's production was hit substantially by weak
metallurgical coal demand in the second half of 2012. However,
the World Steel Association has provided a favorable growth
forecast of 2.9% and 3.2% in global steel usage in 2013 and 2014,
respectively. The rising housing activities in India and
infrastructure needs for the upcoming football world cup in 2014
as well as the 2016 Olympic Games in Brazil will drive steel
We expect SunCoke Energy to derive significant benefits from
its coke operations in these countries in the future.
Furthermore, upturn in steel consumption in the North American
markets will be backed by encouraging automotive industry
On the whole, we expect SunCoke Energy to perform steadily in
the upcoming quarters. Nevertheless, the still fragile economic
conditions in the U.S. are a cause of concern.
SunCoke Energy presently carries a Zacks Rank #3 (Hold).
Another coal industry player expected to profit from a reviving
steel market is
Walter Energy Inc.
). Particularly looking good at the moment are Zacks Ranked #1
Alliance Resource Partners L.P.
) and Zacks Ranked #2 (Buy)
Hallador Energy Company
Based in Lisle, IL, SunCoke Energy engages in mining and
producing coke in the Americas. It offers metallurgical and
thermal coal for steel making processes.
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