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Assessing Arch Coal’s Powder River Basin Coal Shipments in 3Q15

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PRB Coal Shipments

Arch Coal (ACI) sold 29.5 million tons of PRB (Powder River Basin) coal in 3Q15. This was up from 29.3 million tons in 3Q14 and 25.5 million tons 2Q15. Warmer than expected weather during 3Q15 drove a higher demand for electricity for cooling, resulting in higher shipments, and shipments increased despite weak natural gas prices and the implementation of the MATS (Mercury and Air Toxic Standards) by the EPA (US Environmental Protection Agency).

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At the end of 2Q15, the Supreme Court ordered the EPA to review its MATS regulation, but the ruling isn’t expected to have a major immediate effect because power producers have already retired or have decided to retire most of their coal-fired power plants already scheduled for retirement in 2015 under the rule.

However, PRB coal is relatively less impacted by MATS. Peabody Energy (BTU) and Cloud Peak Energy (CLD) are two other major PRB coal producers (KOL).

Price per ton of PRB coal

The price per ton for Arch Coal’s PRB coal came in at $13.07 in 3Q15—marginally higher than the $13.03 price per ton in 3Q14. But pricing fell in comparison to $13.24 a ton 2Q15, as multiyear-low natural gas prices during 3Q15 impacted pricing for coal. Arch Coal’s PRB segment reported $385.6 million in revenues in 3Q15 compared to $381.8 million in 3Q14.

In the next part of this series, we’ll discuss how Arch Coal’s PRB costs panned out in 3Q15.

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