Coal Production Fell Marginally Last Week

Weekly coal production

The EIA (U.S. Energy Information Administration) has released coal (KOL) shipment data for the week ended October 14, 2017. Coal is an important commodity for railway companies such as Union Pacific (UNP) and Genesee & Wyoming (GWR). The EIA publishes weekly coal production data in the US based on railcar loadings. Coal production in the week ended October 14 was 14.9 million short tons, down by approximately 1.4% compared to 15.1 million short tons in the previous week. It is also 4.0% lower than production in the corresponding week in 2016.

Coal Production Fell Marginally Last Week

The Appalachian region is anticipated to produce nearly 3.7 million short tons of the total shipments. The Interior region is expected to source approximately 2.7 million short tons, while the Western region is expected to source the remaining 8.5 million short tons of the total shipments.

Is coal shipment a significant parameter? 

The level of demand for coal is one of the key parameters that drive volume of coal produced from mines. Availability of railroad infrastructure and competition from other cheaper fuels also plays a part in coal shipments. Thus, coal production mirrors shipments.

Any railroad development is an advantage for coal miners operating in the Powder River Basin like Peabody Energy (BTU) and Cloud Peak Energy (CLD).

However, it’s best not to consider only weekly shipment data, as it can be misleading. Factors such as ease of railcar availability, supply-related hurdles, and unfavorable climate conditions may cause unsteady shipments in the short term.

In the next part, we’ll look at region-wise coal prices.