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Your Coal Indicators as of September 22

PART:
1 2 3 4 5
Part 4
Your Coal Indicators as of September 22 PART 4 OF 5

Why Did Coal Production Fall Consecutively in September?

Weekly coal production

Coal shipment data is published by the EIA (US Energy Information Administration) every week, depending on railcar loadings. According to the latest EIA estimates, US coal production totaled 15.5 million short tons in the week ended September 16, 2017.

This production estimate is nearly 1.1% lower than the previous week’s production estimate of 15.7 million short tons. However, it’s 7.2% higher than the shipments we saw during the same week of 2016.

Why Did Coal Production Fall Consecutively in September?

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Of the total estimated coal shipments, ~3.7 million short tons were estimated to come from Appalachia, compared with ~2.8 million short tons from the Interior region. The remaining ~8.9 million short tons were estimated to be from the Western region.

Are coal shipments an important indicator?

Coal demand, rail accessibility, availability, and competition from other fuels all affect coal shipments. Coal is mined according to market demand, and so over the long term, coal shipments can reflect coal production.

A sustained increase or decrease in coal shipments over a few weeks, compared to the same period one year previously, acts as a notable significant indicator for coal (KOL) miners like Arch Coal (ARCH), Peabody Energy (BTU), Cloud Peak Energy (CLD), and Alliance Resource Partners (ARLP).

An increase or decrease in coal shipments week-over-week, compared with the same period one year previously, acts as a notable significant indicator for the above coal (KOL) miners, as well as for others like Natural Resource Partners (NRP).

In the short term, irregularities may be witnessed due to the influence of unfavorable weather, unavailability of rail cars, and supply hurdles, and so in the short term, it can be misleading to use weekly coal shipment data.

In the next and final part of this series, we’ll analyze coal prices in the recent past.

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