The company, which reported a second quarter adjusted EBITDA of $US10.6 million compared to $45.2 million for the second quarter of 2014, will manage the downturn but was preparing for better times ahead, its CEO Colin Marshall said.

“Given increasing utility coal inventories and continuing low natural gas prices, we believe domestic coal prices will remain subdued this year,” he said.

“International prices continue to be negatively impacted by oversupply, the strong US dollar, and the decline in Chinese thermal coal imports. Cloud Peak Energy is actively managing its exposure to these tough conditions and has a strong balance sheet and efficient operations that we believe will help carry us through this cycle.”

Given the large number of Asian plants currently being built to take imported coal and the growth in Indian imports, Cloud Peak still believes the current oversupply will be overcome by growing demand.

“While the strong US dollar has improved the economics for coal producers in Australia and Indonesia, we do not believe new production capacity will be built at current price levels,” the company said.

“The level of Chinese thermal coal imports this year is unclear and will have a significant impact on the international supply demand balance and a direct impact on pricing.

“As international prices have fallen, China has moved to protect its domestic coal producers by raising import taxes and restricting imports of lower quality coals, which are currently depressing prices in other markets.

“We continue to manage our sales of PRB coal and delivery services business to Asian export customers. Exports through the Westshore Terminal for 2015 are currently forecast to be approximately 4.3 million tonnes, which reflects our previously announced reduction of our 2015 export shipments by approximately one million tonnes and an additional agreement with Westshore to further reduce our shipments in the second half of 2015 by approximately 900,000 tonnes.

“The company is also in discussions with our rail and port partners and expect to similarly reduce export volumes in 2016 if weak pricing for seaborne thermal coal persists.

“In what are clearly tough domestic and international conditions, we will stay focused on matching our supply to demand while controlling costs,” Marshall said.

“I continue to be impressed with the ways our employees find ways to control costs across all aspects of the business. We remain optimistic that markets will improve due to the significant reduction in US oil and natural gas drilling and continued Asian demand growth.

“However, we are not sure when this will occur and we believe that our strong financial position and low-cost operations will enable us to manage through these difficult times.”