Both tons shipped and revenues for the third quarter were down on the same time last year but up on the 2012 second quarter, pointing to a gradual improvement over the year.

The company shipped 37.5 million tons of coal in Q3, a decrease of 6% year-on-year but an increase of 19% versus Q2 2012.

Revenues totalled $1.1 billion in Q3 2012, a decline versus Q3 2011 but an increase compared with Q2 2012.

Arch president and chief executive John Eaves said: “Arch’s third-quarter performance reflects improvement over the second quarter due to our cost control efforts and modestly better domestic thermal markets driven by favourable summer weather and higher competing fuel prices”.

Adjusted earnings before interest, tax, depreciation, depletion and amortization totaled $257 million in Q3 2012, 21% higher than in Q3 2011 and 41% higher than in Q2 2012.

“Looking ahead, we believe global coal markets are in the process of correcting – with the domestic thermal market building some momentum while metallurgical markets are bottoming out,” Eaves said.

“Because we expect global coal market conditions to remain challenging in 2013, Arch is executing a strategy to successfully navigate this weak market.

“Our plan is focused on improving operational efficiency, optimizing our asset base and preserving liquidity so we are well positioned to capitalize as the market recovers.”

Arch took steps to rationalize its higher-cost metallurgical coal supply in Q3, including idling three smaller mines in Appalachia.

The operations affected were Bismarck, Carlos and Imperial, which produced a total of 1 million tons of coal in 2011.

At the same time, Arch continued to optimize its diverse, low-cost asset portfolio with the build-out of the high-quality Leer metallurgical coal mine in the region.

Arch continued steps to streamline operations across all regions, including increased shipment levels in the Powder River Basin and in the western bituminous region.

As a result, the company has further reduced its full-year 2012 cash cost guidance range in each of its key operating regions.

While US coal demand for power generation is set to decline by more than 100Mt in 2012 due to one of the mildest winters on record and low natural gas prices, Arch is looking for a gradual turnaround in the US coal market and believes coal consumption will grow again in 2013.

“Coal demand could regain ground lost to competing fuels including natural gas and hydroelectric power and should increase on more normal winter temperatures,” it said.

Coal stockpiles at US power generators have declined from the record levels set in May 2012 and internal estimates suggest customer stockpiles could dip below 180Mt at year’s end.

“Over the course of 2013, Arch expects further liquidation of coal inventories at domestic power generators, helping to set the stage for a more balanced market,” it said.

“US coal exports are projected to reach a record 125 million tons in 2012 even with anticipated slowing in the fourth quarter.”