Shares of SunCoke Energy (SXC -0.92%) were surging 16% higher in afternoon trading Thursday after the coking coal leader reported better-than-expected second-quarter earnings, leading it to raise full-year guidance for adjusted EBITDA guidance.
Metallurgical, or coking, coal is key in the production of steel, and SunCoke reported that global demand for coke helped lift revenue for its domestic coke segment 15% from the year-ago period.
As a result, the company adjusted slightly higher its total production guidance from 4.1 million tons to 4.15 million tons, but consolidated adjusted EBITDA was raised from $215 million-$230 million to $255 million-$265 million.
Total revenue rose 7.7% in the quarter to $364 million, and though the metallurgical coal producer reported an $8.8 million net loss, or $0.11 per share, that was because it took a $0.27-per-share hit from the costs associated with extinguishing its debt as it completed a refinancing, which extended its revolving credit line and its maturities. The refinancing should save the basic materials stock $17 million annually.
SunCoke may even be conservative in its outlook, as S&P Global Platts reported there's no peak in sight for metallurgical coal prices because supply is tight relative to supply.
Part of the reason for the imbalance is that China is accepting more imports from the U.S. and other markets while rejecting those from Australia. It notes China accounted for between 70% and 80% of the seaborne spot metallurgical coal market before it stopped accepting Australian shipments last December.