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How Arch Coal Improved Its Coal Pricing Growth in 1Q16

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1Q16 coal pricing

As we discussed earlier in this series, lower demand for coal led to lower coal pricing for the major coal (KOL) mining companies in 1Q16. The majority of coal mining companies witnessed negative coal pricing growth on a YoY (year-over-year) basis. However, Arch Coal (ACIIQ) saw a marginal increase in average coal sales price per ton sold on a YoY basis.

Arch Coal’s average realized price per ton of coal sold in 1Q16 came in at $19.40 compared to $19.20 in 1Q15. Pure play PRB (Powder River Basin) coal miner Cloud Peak Energy (CLD) reported its 1Q16 average coal sales price per ton at $12.70 compared to $13.10 in 1Q15.

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Alliance Resource Partners (ARLP) reported a marginal decline in coal pricing from $54.50 per ton sold in 1Q15 to $53.80 per ton in 1Q16. Industry major Peabody Energy’s (BTUUQ) 1Q16 coal pricing fell from $25.40 per ton sold in 1Q15 to $24.20 per ton in 1Q16. Westmoreland Coal’s (WLB) average coal sales price per ton came in at $24.70 compared to $27.20 in 1Q15.

Coal pricing growth

Among the major coal companies, Westmoreland Coal’s coal pricing saw a significant decline compared to its peers. The company witnessed an ~9% decline in coal pricing on a YoY basis. WLB is followed by Peabody Energy’s 5% decline, which is closely followed by Cloud Peak Energy’s 3% decline in average realized coal price per ton sold in 1Q16.

Alliance Resource Partners saw a marginal 1% decline on a YoY basis. Notably, Arch Coal’s average coal sales price per ton sold was about 1% higher on a YoY basis.

What helped Arch Coal?

Arch Coal (ACIIQ) is the only major coal company to witness positive coal pricing growth in 1Q16. A better coal sales volume mix and a marginal increase in demand for metallurgical coal helped Arch Coal to have positive pricing growth rate compared to its peers. The sales volume from higher coal prices in the Appalachian region constituted 14% of total sales volume in 1Q16 compared to 9% in 1Q15.

In the next part of this series, we’ll compare the 1Q16 revenue growth rate of the major coal companies in 1Q16.

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