Homescrap metal pricesAlpha Natural Resources Metallurgical Coal Market Overview

Nov 3 2011 – Alpha Natural Resources, Inc. (NYSE: ANR), a leading U.S. coal producer, reported third quarter net income of $66.4 million or $0.29 per diluted share compared to net income of $31.9 million or $0.27 per diluted share for the third quarter last year.

Of interest to persons in the metal market / industry are these statements from their press release:

Global demand for metallurgical coal remains robust driven primarily by growth in Asia. Chinese raw steel production increased 18 percent year-over-year in September and reached an annualized pace of approximately 750 million metric tonnes, up from an annualized run rate of approximately 720 million metric tonnes earlier this year. Driven by continued demand growth and limited new sources of supply in the near-term, the market for metallurgical coal remains strong, although pricing has declined somewhat from the record highs achieved earlier this year as Australia has largely recovered from severe flooding earlier in the year and the European debt crisis has created some uncertainty in the near-term. As the third largest supplier of metallurgical coal in the world, Alpha is well positioned to benefit from the Asia-driven demand growth for metallurgical coal for the foreseeable future.

For the year 2012 Alpha has increased its Eastern metallurgical coal shipment guidance to a range of 23.5-26.5 million tons compared to the previous range of 23.0-26.0 million tons. Based on the midpoint of the current guidance range, approximately 89 percent of Alpha’s anticipated 2012 met coal shipments remains unpriced, with approximately 11 percent committed and priced at an average per ton realization of $143.59 and 39 percent committed and unpriced. As metallurgical coal shipments increase and the Company continues to optimize its asset portfolio in the East, Alpha has reduced its Eastern steam coal shipment guidance to a range of 46-52 million tons compared to the previous range of 49-54 million tons. Based on the midpoint of current guidance, 62 percent of Alpha’s anticipated 2012 Eastern steam coal shipment volume is committed and priced at an average per ton realization of $67.92 and 17 percent is committed and unpriced. Alpha has also adjusted its Western steam coal shipment guidance to a range of 49-53 million tons compared to the previous range of 48-52 million tons, and based on the midpoint of the current range, 92 percent of Alpha’s 2012 Western steam coal shipment volume is committed and priced at an average per ton realization of $12.68. Adjusted cost of coal sales in 2012 are anticipated to range from $70.00 to $75.00 per ton in the East and $10.50 to $11.50 per ton in the West. Ranges for selling, general and administrative expense and depletion, depreciation and amortization expense in 2012 are expected to be $230 million to $270 million, and $1.05 billion to $1.15 billion, respectively. Interest expense is expected to be between $175 million and $185 million, and capital expenditures for the year are anticipated to range from $650 million to $850 million.

 

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