US miner Arch Coal said Wednesday it expects to sell between 7.2 million and 7.8 million st of metallurgical coal in 2017, increasing the upper end of its range, and said almost 75% is committed and priced as of end-December 2016.
Arch indicated almost 2 million st of met coal sales in 2017 is exposed to spot pricing indices and other pricing mechanisms, compared to fixed pricing, based on Platts calculations using figures released in a quarterly earnings statement.
"At the midpoint of its guidance level, Arch is nearly 75% committed on coking coal sales for the full year, with nearly 35% of that committed volume exposed to index and other pricing mechanisms," it said.
Arch said 3.3 million st of coking coal is committed and priced for 2017, at an average of $89.70/st. Arch sold 700,000 st of PCI ahead at an average $64.82/st, indicating a 72.3% ratio to its coking coal pricing.
As of September 30, 2016, Arch had 2.1 million st of met coal sales in 2017 committed at $66.78/st.
Arch in Q4 2016 sold 1.7 million st of coking coal at an average realized price of $75.36/st, and 200,00 st of PCI at $54.78/st. Arch's metallurgical segment showed an operating cash margin of 19% in Q4.
"Realizations benefited from higher pricing on new coking coal sales and stronger pricing on index-based contracts that shipped during the quarter," it said of Q4 results. "Arch believes its metallurgical segment costs are at the very low end of the industry cost curve."
Arch said it expects the met coal market to "address the undersupplied conditions of 2016, with new supply coming online in response to stronger price signals."
"With this supply response, we expect the market to return to a healthy balance, with prices stabilizing at levels needed to keep the market in relative equilibrium."
