SunCoke Energy (SXC) Guides Q1 Domestic Coke Output - Analyst Blog
SunCoke Energy Inc.SXC provided the preliminary guidance for first-quarter 2015 domestic coke production and domestic capacity utilization.
Domestic coke production in the first quarter is estimated at 998 thousand tons, up 5.7% year over year, primarily on the back of an improvement in production at the Indiana Harbor cokemaking facility, which led to stable production volumes. In addition, improved coal-to-coke yields this winter compared to the last will likely boost production. However, production guidance is around 7.8%, lower than first-quarter 2014 level.
The production upswing will boost SunCoke Energy's domestic capacity utilization in the first quarter, currently 95%, up 500 basis points year over year.
In addition, SunCoke Energy reaffirmed its guidance for 2015 consolidated adjusted earnings before interest, taxes, depreciation and amortization in the range of $190-$210 million, compared with $237.8 million a year ago.
In 2014, SunCoke Energy completed the original refurbishment project at its Indiana Harbor cokemaking facility. The company is currently in the process to commission new pusher/charger equipment and a complete replacement of oven floors and sole flues.
SunCoke Energy also completed the development of the gas-sharing environmental remediation project at Haverhill 2 and is currently testing full implementation of the system.
Domestic coke operation at SunCoke Energy consists of cokemaking and heat recovery facilities at its Granite City, Haverhill, Indiana Harbor, Jewell and Middletown plants. The company invested a total of $272.7 million between 2012 and 2014 as Domestic Coke capital expenditure, including an allocation of $104.1 million for its Indiana Harbor operations.
SunCoke Energy's capital expenditure in 2015 is estimated at $90 million, which includes a considerable portion for ongoing coke and coal logistics expenditure. These initiatives will enable the company to improve its production capacity, going forward.
Metallurgical coal is the primary raw material, utilized for the production of steel due to its heat producing feature. As per a World Steel Association report published in Jun 2014, global steel demand will increase in 2015, primarily driven by gradual recovery in the U.S., the EU, Japan and several other emerging economies. Increase in steel demand will subsequently boost coal consumption, which will boost SunCoke Energy's performance.
SunCoke Energy currently has a Zacks Rank #3 (Hold). Some better-ranked stocks in the same industry include Hallador Energy Company HNRG , Rhino Resource Partners LP RNO and Alpha Natural Resources, Inc. ANR . Hallador Energy and Rhino Resource sport a Zacks Rank #1 (Strong Buy), while Alpha Natural Resources carries a Zacks Rank #2 (Buy).
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