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. The quotes are generally pieces of information that I find interesting or helpful to understanding the company, industry or economy and are not meant to provide summaries of the full content of the call. Other posts in this series can be found by clicking here. Full transcripts can be found at Seeking Alpha.
“PRB coal is competitively positioned versus natural gas. PRB coal plants have been running all year with gas prices averaging in the 365 range. Days of supply at PRB serve plants declined to 60 days at the end of September and are likely to fall below this, this winter. On the national level, customer coal stockpiles could end the year around 150 million tons. That’s more than 30 million ton drawdown during the course of 2013. US coal demand is exceeding production and supply curtailments, particularly in Central App are accelerating. Looking ahead, even if we play at a scenario where coal demand is flat in 2014, we are on pace for another 30 million ton drawdown of stockpiles next year all else equal. With such a drop inventories will fall to levels not seen since 2005. That’s why we believe coal markets could become much more dynamic next year as compared to what we have seen during the last 18 months.”
“Brandon we are certainly seeing some positive signs in the PRB, inventories are coming down, we like where natural gas prices are right now, with normalized weather the balance of the year we think we really could be setting ourself up for a much better 2014 where PRB is concerned.”
“I think we would need to see a little bit more improvement on the met side, certainly inventories get down a little bit more in the PRB, activity pick-up in the PRB, see some price appreciation out there – those two things would help us.”
“My sense, across the industry and not just in the peer that, you know, equipment replacements have slowed and clearly there has been maintenance deferrals. And those are going to ultimately eat into any reaction we’re going to see. What’s more, as I’ve said in the past, this isn’t the basin I left 7, 8, 10 years ago. It’s not quite as easy to turn up the production as it was then.”
“we think there’s quite a bit more coal that needs to be purchased in 2014. You could start seeing some price appreciation as we move into next calendar year.”
“our [met coal] domestic customers continue to run their plants at pretty high capacity factors. They have been in the mid to high 70s most of the year. So, we think that the demand will be there. We’ve enjoyed a long-term relationship with our domestic customers I think.”