Relenting pandemic and rebounding steel coal demand push Arch to profits

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CREVE COEUR — The loosening grip of the coronavirus pandemic and a recovering demand for coal — particularly the kind used for steelmaking — generated strong quarterly earnings for Arch Resources, the company reported Tuesday. 

The Creve Coeur-based coal giant reported more than $594 million in quarterly revenue for the three-month period ending on Sept. 30 — a 55% increase from the $382 million seen in the same period last year.

Profits jumped to $89 million, compared to a $191 million loss last year.

The company attributed the turnaround to an “ongoing rebound in global steel production” that has driven strong demand and prices for metallurgical coal, used to make steel.

Since last year, the company has embarked on a “strategic pivot” toward coal for the steel industry, called “coking” coal, and away from sagging demand in the electricity sector.

Market conditions have made it a great time to cater so heavily to steelmakers.

Globally, the company said steel production is up almost 11%, compared to 2020 levels, and up more than 6% from the pre-pandemic conditions of 2019. CEO Paul Lang called the swing “an incredible snapback,” on a Tuesday morning call with investors.

He said that a “mismatch” of supply and demand has further bolstered Arch’s hand, since global coking coal supply is lagging after years of under-investment from the industry, and constrained by the long time required to develop new mines. For example, coking coal shipments from Australia, the U.S., and Canada — the three largest exporters of the resource — are down by 20 million metric tons, compared to two years ago.

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