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Key Takeaways from Coal Indicators for Week Ended September 8

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Part 4
Key Takeaways from Coal Indicators for Week Ended September 8 PART 4 OF 5

Coal Production Fell in Week Ended September 2

Weekly coal production

Coal shipment data are published by the EIA (U.S. Energy Information Administration) every week based on railcar loadings. According to EIA estimates, US coal production was 16.4 million short tons during the week ended September 2, 2017. This production estimate is nearly 1.9% lower than the previous week’s estimate of 16.7 million short tons. However, it’s 9.6% higher than the comparable week in 2016.

Coal Production Fell in Week Ended September 2

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Of the total estimated coal shipments, ~4.0 million short tons were estimated to come from the Appalachian region compared to ~3.1 million short tons from the Interior region. The remaining ~9.4 million short tons were estimated to come from the Western region.

Coal shipment’s importance as an indicator

Shipments are a function of various factors, including coal demand, rail availability, and competition from other commodities. Coal producers mine coal based on demand. So coal shipments mirror production over the long term. A sustained rise or fall in coal shipments over a few weeks compared to the same period a year before acts as a significant indicator for coal producers (KOL) such as Peabody Energy (BTU), Cloud Peak Energy (CLD), Arch Coal (ARCH), and Alliance Resource Partners (ARLP).

However, in the short term, deviations could be seen due to factors such as unavailability of rail cars, bad weather, and supply issues. In this respect, weekly coal shipment data may be misleading.

In the next part of this series, we’ll look at coal prices for the past five weeks.

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