SunCoke Q2 earnings improve on coke-making, logistics ops

SunCoke Energy Inc.’s earnings improved in the second quarter, with the company citing strong performances in its coke-making and logistics segments.

“Our domestic coke plants continued running at full capacity, and our logistics segment continued to deliver strong results, handling 6 million tons during the quarter,” Katherine Gates, president of SunCoke, said in a statement on Wednesday.

The Lisle, Ill.-based company logged net income attributable to SunCoke of $21.5 million, up 5.4% from $20.4 million a year earlier on revenue that declined 11.9% (-$63.5 million) to $470.9 million.

The metallurgical coke producer said the increase in net income was due to lower depreciation, amortization, and interest expenses, that were partially offset by lower sales volumes and pricing in the domestic coke segment.

The domestic coke segment’s Q2 sales volumes of 973,000 short tons (st) were down 6.7% from 1.04 million st a year earlier.

SunCoke’s logistics segment handled 5.98 million st during Q2, a 15.2% boost over 5.19 million st a year ago.

The company has handling and mixing services of coal and other aggregates at Convent Marine Terminal (CMT) in Convent, La.; Lake Terminal in East Chicago, Ind.; and Kanawha River Terminals on the Ohio River.

Granite City update

SunCoke’s Granulated Pig Iron (GPI) project remains its top growth focus despite delays, the company said Wednesday during its earnings call.

“There’s been no change in our focus,” Gates noted on the call. “The fundamentals of that low-cost iron ore, the availability of the blast furnace, the location of our plant, and the ability to send that high-quality GPI then to Big River (Steel) – that’s really hard to replicate in the market. So, we continue to strongly believe in the fundamentals of that project.”

Recall that SunCoke and U.S. Steel signed a non-binding letter of intent in June 2022 for SunCoke to take over the steelmaker’s two Granite City blast furnaces in southern Illinois and convert them to pig iron production.

U.S. Steel indefinitely idled iron- and steelmaking at its Granite City Works in late November last year, including its ‘B’ blast furnace, one of two BFs at the 129-year-old mill. The ‘A’ furnace was indefinitely idled in April 2020, according to SMU’s blast furnace status table.

“We continue to work on it and U.S. Steel continues to work on it with us,” Gates added.

Further North American consolidation

SunCoke anticipates no change in supply or demand fundamentals in the North American market with Cleveland-Cliffs pending acquisition of Canada’s Stelco.

“There’s really no change in the macro supply and demand,” noted Gates. “We would do what we’ve always done, which is to aim to run full and sell out.”

Outlook

For full-year 2024, the company said its total production of domestic coke is expected to be ~4.1 million st, while consolidated net income is expected to be between $67 million and $84 million.