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    SunCoke Energy Inc (SXC)

    SXC Q3 2024: US Steel Contract Extension and $12M Logistics Expansion

    Reported on May 28, 2025 (Before Market Open)
    Pre-Earnings Price$8.62Last close (Oct 30, 2024)
    Post-Earnings Price$9.60Open (Oct 31, 2024)
    Price Change
    $0.98(+11.37%)

    What went well

    • Integrated GPI Project Support: The Granite City supply agreement extension is part of the broader GPI project, underscoring management’s commitment to bridging interim challenges due to regulatory delays while maintaining confidence in the project’s fundamentals.
    • Logistics Capacity Expansion: A planned $12 million capital investment to expand barge-to-rail unloading capacity from 2 million tons to 5 million tons positions the company to capture additional business volume.
    • Proactive Business Development: Management’s focus on continually sourcing new business opportunities at both coke plants and logistics terminals indicates a strategy for sustainable revenue growth.

    What went wrong

    • Market Reliance & Regulatory Uncertainty: The Granite City coke supply extension is tied to delays from government actions (specifically the U.S. Steel sale to Nippon), which may indicate ongoing uncertainties impacting future revenue streams.
    • Bridge Dependency on GPI Project: The extension serves as a temporary bridge while awaiting progress on the GPI project; prolonged delays in government approvals could hinder the transition to more favorable long-term contracts, putting pressure on EBITDA.
    • Capital Investment Risk: The $12 million expansion to boost capacity, while enabling greater business potential, exposes SXC to downside if anticipated customer demand or new business fails to materialize, increasing operational risk.

    Q&A Summary

    1. GPI Project
      Q: Are extension and GPI project connected?
      A: Management explained that the Granite City extension is integrated into the GPI project, serving as a bridge due to governmental delays on a U.S. Steel transaction, which impacts EBITDA.

    2. Supply Destination
      Q: Where is the extended coke material going?
      A: Management clarified the extended coke supply agreement is designed for sale to U.S. Steel, directly linking the contract extension to their customer base.

    3. Capital Investment
      Q: Details on the $12M Kanawha expansion?
      A: They noted a $12 million capital project is underway to boost barge-to-rail unloading capacity from 2 to 5 million tons, aiming to harness higher volumes at the logistics terminals.

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