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Coal Shipments Rise Marginally – Even as Natural Gas Prices Fall

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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—like Union Pacific (UNP) and CSX (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 27.

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Coal shipments rise

According to EIA estimates, during the week ending March 27, US coal shipments increased marginally to 18.27 million tons—compared to 18.18 million tons during the week ending March 20. Out of the total shipments, 7.60 million tons were recorded in the East while the remaining 10.67 million tons was recorded in the West.

Impact on producers

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

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