Arch now expects US coal consumption for power generation to decline by 80Mt in 2015 as compared to 2014, due to the surplus of natural gas and the impact of new environmental regulations that took effect in April.
“As a result of these factors, utility stockpiles increased by an estimated 10 million tonnes during the first quarter and are expected to build further over the course of the year,” the company said.
It said it expects seaborne coal markets to rebalance in time as demand grows, new global supply slows, and previously announced supply rationalisations take effect.
Domestic coal supply reductions are counterbalancing demand declines to some extent, according to Arch.
Mine Safety and Health Administration data suggests that total domestic production decreased by 13Mt in the first quarter of 2015 versus the fourth quarter of 2014. Arch expects coal supply reductions to continue and accelerate as the year progresses.
Arch now expects thermal sales volumes for 2015 to be in the range of 120Mt to 130Mt.
The company has lowered its metallurgical coal sales guidance, and now expects to ship between 6.0Mt and 6.8Mt for 2015. Using this revised volume guidance, Arch is more than 95% committed on thermal sales and 75% committed on metallurgical sales for the full year.
Arch has also reduced its annual cash cost-per-ton guidance range for its Appalachian segment, while maintaining its cost outlook for the Powder River Basin. The company has raised the 2015 cash cost-per-tonne guidance range for the company’s bituminous thermal region to reflect the impact of lower production levels.
