SunCoke Energy, Inc. - $SXC (short)

SXC (short): Metallurgical coke producer facing 1.6M tons (38% capacity) contract non-renewals by '26 with Cliffs (acquired Stelco w/ internal coke capacity) & US Steel (shuttered BFs at Granite City). Blast furnace steelmaking in structural decline (70% EAF now, 90% by 2040), coke demand down 45% since 2018. Lost volume must hit spot market where EBITDA/ton deeply negative vs ~$70 on contracts. Street at $150M '26 DC EBITDA but math suggests $95-125M realistic, implying 35%+ downside at current multiple + re-rate risk. Mgmt introduced facility 'rationalization' talk Q3 after Algoma breach. High fixed costs mean unprofitable spot sales until closures. GPI conversion option at Granite City requires $250M debt raise, now OTM. Catalysts: YE contract expirations, facility shutdowns, earnings misses, possible dividend cut. International sales impossible vs China pricing. 6% SI, no fundamental institutional holders.

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