SunCoke Sees Lower 1Q Coke Yield

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SunCoke Energy Inc. (SXC) stated that it expects first quarter 2013 domestic coke production to be lower than the comparable quarter last year. First quarter production volume is estimated at 1,051 thousand tons, down 1.6% from 1,068 thousand tons in first quarter 2012.

The year-over-year decrease is due to an extra day of production in the comparable quarter of 2012, which was a leap year. Lower production from its Indiana Harbor facility can also contribute to the decline, which was marginally arrested by higher production at the Middletown facility.

At the fourth quarter 2012 release, SunCoke Energy projected domestic coke production of 4.3 million tons in 2013. The first quarter expected production is more or less in-line with this.

Coke is primarily consumed in the steel industry for manufacture of steel. Its demand depends to a large extend on the growth and movement in the steel industry. The economic uncertainty has impacted the U.S. steel industry, on which we presently have a negative outlook. Since demand for coke is tied with the demand from the steel industry, the domestic demand for coke might also fall.

It appears that SunCoke is presently trying to expand its international operations, which will strengthen its operation given the softness in the domestic markets. In Mar 2013, SunCoke entered into a partnership with Indian steel major, VISA Steel Limited to initiate a cokemaking program in that country.

SunCoke Energy Inc. is currently has a Zacks Rank # 3 (Hold). Utilities which are predominantly based on coal for power generation and hold a favorable Zacks Rank are ALLETE, Inc., (ALE), Ameren Corporation (AEE) and Otter Tail Corporation (OTTR). All of these currently carry a Zacks Rank # 2 (Buy) and warrant a consideration.

Headquartered in Lisle, Illinois, SunCoke Energy is a producer and supplier of coke needed for the steel making process. The company has 1,214 full time employees and a market cap of $1.10 billion.
 

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