Arch Coal 2Q14 Earnings Call Notes

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This post is part of a series of posts called “Company Notes.” These posts contain quotes and exhibits from earnings calls, conference presentations, analyst days and SEC filings. Full transcripts can be found at Seeking Alpha

Believe we are close to the bottom for met coal

“Of course, we believe that we are close to the bottom in the met markets today. Global production curtailments have accelerated in 2014, and by our account total nearly 20 million tons thus far.”

Thermal coal consumption up despite mild summer

“Turning now to domestic thermal markets, we expect coal consumption to be up by 20 millions tons or so over last year, and that’s with the cooler summer weather that’s been playing out today.”

Coal still in the money vs. natural gas and stockpiles are low

“Western coal remains in the money compared with current natural gas prices and coal stockpiles at generators are on the low end in some cases, well below targeted levels”

Seeing interest in thermal for 15 16 17

“as Paul indicated we went out and we continue to see a lot of interest 15, 16, 17 in the marketplace that we think are going to be a pretty decent pricing.”

confident that we can carry cost controls into 2015

“it is really a credit to Paul and his team, how hard they’ve worked on cost control and management of our capital and you are really starting to see this. I’m confident that we can carry that not only in the back half of the year, but as we move into 2015”

Spot pricing for met coal coming at 112-114 range

“I would tell you, with third-quarter benchmark at 120, we are seeing spot kind of we’re around that 112 to 114 range. We are certainly disappointed in the pricing, but we don’t think that this pricing sustainable. When you look at the percentage of suppliers in the seaborne market that are not generating any positive cash that percentage is pretty significant.”

Still 25 m tons of oversupply in the market today

“Currently, we see about, call it, 25 plus or minus, million tons of oversupply in the market today. We think that as we move into 2015 and you get a full year of these curtailments, that that will have an impact”

When met markets correct, they over correct

“We don’t see a whole lot improvement for the balance of this year, but as we move into 2015 there’s one thing that we know about met market is they correct, and they often over correct.’

We feel very comfortable with our position

“suffice it to say we feel very comfortable with our position and with future opportunities and continue to be able to manage our liquidity aggressively as we move forward if the challenging markets persist.”