(SNL, October 28) – Cloud Peak Energy Inc. President and CEO Colin Marshall said coal prices are moving fast and the pure-play Powder River Basin is eyeing global markets carefully to take advantage.
The company announced in its earnings release Oct. 27 that it had contracted about 1 million tons of coal to export from November through February 2017. Marshall said on an Oct. 27 earnings call that the domestic picture also improved in the third quarter due to increased electricity demand from a warm summer with customers “increasingly focused on taking delivery of their contracted coal this year.”
The only thing stopping Cloud Peak from getting more coal tons to market is charging up a supply chain Marshall said was essentially moving from a “standing start” this quarter.
“It’s actually about getting the supply chain moving to get that coal through,” Marshall said. “Because the one thing we don’t want to do is oversell and then be faced with a load of [demurrage]. That wouldn’t be smart.”
The market is moving so fast, he said, “people are scrambling to get coal.” Marshall said the company is selling directly to its customers in Asia versus participating in hedging coal prices.
“We don’t want to go and lock in the price at a low level,” Marshall said. “And things are moving so fast there at the moment, it’s a question of watching where the market is. And we’ll certainly [leap] if we believe there’s any opportunities, but not yet. It’s only been a few weeks since we actually reentered the market.”