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Coal Shipments Typically Fall Toward the End of Winter

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The EIA’s coal production estimates

Every week, the EIA (U.S. Energy Information Administration) publishes shipments based on coal railcar loadings. Coal is an important commodity for railroad companies such as Union Pacific (UNP) and CSX Corporation (CSX). However, coal’s importance is decreasing due to the emergence of shale oil. It’s also decreasing because of competition from other commodities.

Coal producers mine coal on demand. As a result, the EIA’s shipment estimates mirror production. Shipments are a function of demand and other factors like rail underperformance and competition from other commodities. The report is published with a one-week lag. The current report is for the week ending March 20.

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Coal shipments drop

According to EIA estimates, during the week ending March 20, US coal shipments decreased to 18.2 million tons. This compares to 18.5 million tons during the week ending March 13. Out of the total shipments, 7.6 million tons were recorded in the East while the remaining 10.6 million tons were recorded in the West. The shipments during the week correspond to 105,987 railcars.

Impact on producers

Weekly coal shipment data can be misleading. Apart from genuine demand-side issues, the data can be distorted by factors such as unavailability of railcars, bad weather, and supply issues. A sustained increase or decrease in coal shipments over a few weeks when compared to the previous year is a positive or negative indicator for coal producers (KOL) such as Peabody Energy (BTU), Alliance Resource Partners (ARLP), Arch Coal (ACI), and Cloud Peak Energy (CLD).

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