Crude Oil Up, Natural Gas Down: Analyzing the Impact on Coal
Coal shipments
According to the EIA’s (U.S. Energy Information Administration) estimates, during the week ending June 19, US coal shipments rose to 16.28 million tons. This total compares to 15.36 million tons for the week ending June 12. Out of the total shipments, 6.78 million tons came from the East, while the remaining 9.50 million tons came from the West. Both regions clocked gains in coal shipments. The shipments correspond to 95,095 railcar loadings.
Why is this indicator 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 falling due to the emergence of shale oil. It’s also falling because of competition from other commodities.
Coal producers mine coal on demand. So, the EIA’s shipment estimates mirror production. Shipments are a function of demand and other factors—like rail availability and competition from other commodities.
Impact on coal producers
Weekly coal shipment data can be misleading. Apart from genuine demand-side issues, factors like the unavailability of railcars, bad weather, and supply issues can distort the data. A sustained rise or fall in coal shipments over a few weeks, compared to the previous year, is a significant 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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