US rail coal shipments have defied expectations and have remained steady, bolstered by unexpected strength in coal exports.
“The export coal is doing better than we thought or anyone else thought,” CSX chief executive James Foote said on 7 June. “And it looks like it will be stronger throughout the second half of the year as well.”
Railroads had expected coal volume to slip. The [US Energy Information Administration (EIA)](EIA) forecast coal output and generation to fall compared with 2017.
But US coal traffic through 2 June totaled 1.8mn carloads, essentially flat with the same 22 week-period in 2017. After a slow start, export demand has pushed coal shipments over 2017 levels.
Union Pacific shipped more export coal in 2017 than any year in the previous 20 years, and 2018 shipments have kept a similar pace, vice president marketing and sales for energy Linda Brandl said on 31 May.
US exports rose to a five-year high in April on trade with relatively new customers. Exports out of Hampton Roads, Virginia, reached a four-year high in April.
Shipments rose to just under 11.1mn short tons (10.1mn metric tonnes) from 7.24mn st a year earlier, according to US Census Bureau data released on 6 June. The last time exports were higher was in March 2013, when they totaled 13.6mn st.
Norfolk Southern expects coal exports between 5mn-7mn st each quarter, chief financial officer Cindy Earhart said on 7 June. Domestic volume is still expected in the 15mn-17mn st range, but Earhart said the summer has started slowly after a cool April.
Exports remain dependent on seaborne coal prices, which could drop, forcing US producers out of the market.
And domestic volume remains tied to the price of natural gas.
EIA last month lifted its outlook for US coal exports to 88.1mn st, but that remains down compared with 2017 shipments of 97mn.
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- On June 11, 2018