Coal shipments fall
According to EIA (U.S. Energy Information Administration) estimates, during the week ending April 24, US coal shipments dropped to 16.82 million tons—compared to 16.99 million tons during the week ending April 17. Out of the total shipments, 7 million tons were recorded in the East, while the remaining 9.82 million tons were recorded in the West.
Why is it important?
Every week, the EIA 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 in freight 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.
Impact on coal producers
Weekly coal shipment data can be misleading. Data 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), Alpha Natural Resources (ANR), Arch Coal (ACI), and Cloud Peak Energy (CLD).