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Coal Production Falls in the Week Ended November 10

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Weekly coal production

Coal shipment metrics for the week ended November 10, 2017, were released by the EIA (US Energy Information Administration) on November 16, 2017. Coal is a primary commodity for railway companies such as Union Pacific (UNP) and Kansas City Southern (KSU). Each week, US coal production information is issued based on railcar loadings. In the week ended November 10, coal production fell 1.7%, from 15.0 MMst (million short tons) in the previous week to 14.8 MMst. Coal production fell 7.8% year-over-year.

During the week, coal production fell in all regions. Approximately 3.7 MMst were mined from the Appalachian region, down ~2.8% from the previous week. The Interior region is estimated to have produced nearly 2.7 MMst, also ~2.8% lower than in the week prior. The Western region produced the remaining 8.4 MMst.

Are coal shipments a significant parameter? 

For coal (KOL) mining companies such as Westmoreland Coal (WLB) and Cloud Peak Energy (CLD), the volume of coal produced is hugely dependent on the extent of demand for coal. Competition from cheaper non-renewable energy sources, as well as railroad availability, play a significant role in coal shipments. As a result, coal production and shipments reflect each other.

Poor weather conditions, railcar accessibility, and supply-related impediments may result in short-term shipment discrepancies. Therefore, considering only weekly shipment data may be misleading. In the final part of this series, we’ll discuss coal prices in different regions.

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