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Union Pacific coal volumes climb on domestic, seaborne demand

https://www.chemnet.com   Jul 25,2017 Platts
Union Pacific coal volumes continued to top year-ago counts in the second quarter, with increased domestic and export thermal demand driving improvements, according to company officials.

The railroad reported Thursday that coal volumes increased 4.9 million st from the same quarter last year to 33.5 million st. Powder River Basin tonnage increased 17% year on year to 25.9 million st, and volumes from Colorado and Utah mines increased 17% to 7.6 million st.

Second-quarter coal revenues were up 25% from the year-ago quarter to $619 million and revenue per carload increased 7% to $2,173.

Building on Q1 gains, UP coal volumes are up 19% compared with the first half of last year to 60.1 million st.

Chief Marketing Officer Beth Whited said during an earnings call that stockpiles at utilities the railroad serves have fallen below the five-year average. Whited added that higher natural gas prices and continued export demand from the West Coast also have contributed to coal gains.

Looking ahead, Whited said the railroad expects Q3 and Q4 coal volumes to rise sequentially, but stay relatively flat to numbers posted last year, when volumes increased as the market improved from springtime lows.

"At this point we haven't considered that we would have significant production shortages in the fourth quarter, and we're definitely still thinking it looks flattish," Whited said. "I suppose it all depends on what plays out with third-quarter demand and hot weather; and if the producers are in a place where it makes economic sense to them, I would guess they'll keep producing into that."

UP last year shipped 40 million st in Q3 and 37.5 million st in Q4.
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