Coal Production Fell in the Week Ended October 7

Weekly coal production

Coal (KOL) production in the United States is reported by the EIA (U.S. Energy Information Administration) every week. The weekly report is based on railcar loadings. Coal is a significant commodity for rail companies such as Union Pacific (UNP) and CSX Corp. (CSX).

The coal shipments for the week ended October 7, 2017, totaled 15.1 MMst (million short tons). The latest production estimate has dropped approximately 1.3% compared to 15.3 million short tons produced in the previous week. This estimate was also 3.6% lower than production in the corresponding week in 2016.

Coal Production Fell in the Week Ended October 7

The Appalachian region is estimated to produce nearly ~3.8 million short tons. The Interior region is expected to produce approximately 2.7 million short tons of the total shipments. The remaining 8.6 million short tons are expected to be sourced from the Western region.

Is coal shipment a significant parameter? 

The volume of coal produced from mines is driven by the level of demand for coal. Factors that play a part in coal shipments are accessibility to railcar availability and competition from cheaper fuels. As a result, coal production mirror shipments.

Railroad improvement benefits Peabody Energy (BTU) and Cloud Peak Energy (CLD), which operate in the Powder River Basin.

However, considering only weekly shipment data may give an incomplete picture. Factors such as railcar unavailability, adverse weather conditions, and supply-related hurdles could result in erratic changes in shipments in the short term.

In the final part of this series, let’s look at the price trajectory of region-wise coal.