Boston, MA 07/30/2014 (wallstreetpr) – Struggling coal producer, Arch Coal Inc. (NYSE:ACI), was up in Tuesday trading session by 6.64% after the company reported less loss for its second quarter, slightly lower than what analysts had expected. Low-Coal prices and increased competition from natural gas, as well as railroad backlogs, have in the recent past acted against the company, seen by the fact that its stock is trading below the $5 mark.
Net Loss Widens
Despite beating estimates, concerns are still ripe considering the company’s net loss widened from last year’s $72.2 million to $96.9 million or 46 cents a share. Analysts had expected Arch Coal to post a loss of 48 cents a share. Low-export levels, as well as metallurgical prices, continue to hurt the company, which just like other companies has been struggling amidst the booming natural gas industry.
Rail road’s opting to carry more domestic oil and gas instead of coal has also considerably hurt Arch Coal core business, which has also been one of the main complaints by many coal companies. Arch Coal estimates that between 4 million and 5 million of tons shipments were affected due to railroad backlogs mostly from its Western operations in the Powder River Basin.
Market Conditions Unsustainable
Arch Coal has already tainted the current market conditions as unsustainable as high-cost mines continue to close due to lack of sufficient business. The closure of some of the mines is also expected to considerably tighten the metallurgical markets. Arch Coal has already announced the closure of one of its mines in Appalachia, having sold about 300,000 tonnes since the start of the year.
Thermal coal production is expected to be below 1 billion tons for the second year in a row, something that should further tighten supplies for a lower margin commodity. Arch Coal Inc. (NYSE:ACI) has cited ‘Transportation Bottlenecks’ as the reason behind the reduction of its coals sales for the year, from a high of 132 million tons to 130 million tons.
