Warrior Met Coal Sees Strong 3Q Demand From Asia — Commodity Comment

The U.S.-based producer of steel-making coal sold 2.3 million tons of coal, up from 1.5 million tons in the comparable period a year ago.

“The 51% increase in sales volume was driven by continued improved performance by our rail transportation provider and the McDuffie Terminal, which enabled Warrior to export more product and draw down excess inventory,” the company said.

“In addition, higher production was primarily due to both Mine No. 4 and Mine No. 7 operating at higher capacity levels in this quarter as a result of additional employees returning from the labor strike.”

Chief Executive Walt Scheller said, “As evidenced by our sales volumes, demand for shipments from our global contracted steel-making customers as well as for spot cargoes from Asia was strong.

“We continued to see improved performance from our transportation partners and at the McDuffie Terminal, which allowed us to ship more volume and reduce our excess inventory,” Scheller said.

“Warrior has had a larger ratio of spot volume this quarter, mainly due to the end of the strike and the quality change at Mine 4. Normally, we sell most of our spot volumes into our natural markets of Europe and South America, but both regions have offered a limited number of spot transactions this year.

“As such, Warrior has directed the majority of its spot business to China, India and other South Asian countries. However, our average net selling price was impacted by the freight differentials associated with the Pacific Basin, and in particular China, additionally impacted by the negative arb in relation to the PLB FOB Australia.

“We believe the rapid and steep rise in the PLV Index price is based upon strong demand from China and India, supply disruptions out of Australia, specifically for premium hard coking coals, and a severe lack of liquidity supporting the inadequate index system.”

Warrior produced almost 2 million tons of steel-making coal, up from 1.6 million tons in the comparable period a year ago.

On its outlook:

Warrior maintained its full-year guidance of 6.8 million to 7.4 million tons of coal and sales of 7.1 million to 7.7 million tons.

Write to Mary de Wet at [email protected]