As overall coal transportation volumes decline for CSX, loadings from the Illinois Basin are making up a greater portion of thermal coal on the US railroad's system, an executive said Thursday.
During an earnings call with media and investors, Fredrik Eliasson, chief sales and marketing officer, said IB coal accounted for 37% of the railroad's utility coal profile during the second quarter.
Powder River Basin coal made up 20% of domestic thermal coal shipments, while volumes from the Appalachian basins saw a slight decline compared with the first quarter, he said.
Eliasson did not provide any numbers for the Appalachian basins on the call or comparisons for year-ago IB and PRB shares of shipments.
"We expect the Illinois Basin to do well longer term as part of our utility mix," Eliasson said.
In 2015, CSX made multiple cuts to its Central Appalachian coal system, but added infrastructure to its interior footprint including the opening of the $100 million Casky Yard in southwest Kentucky to facilitate the flow of IB coal to utilities in the Southeast.
In Q2, the railroad reported that its domestic thermal coal volumes fell 37% year on year to 11.5 million st, and total first-half volumes dipped 33% year on year to 23.9 million st.
Total coal volumes fell 34% to 195,000 carloads in Q2 from 295,000 carloads in the year-ago period, with tonnage shipped slipping 34% to 22.5 million st from 33.7 million st.
STOCKPILES AS HIGH AS 98 DAYS
Eliasson said coal stockpiles at utilities CSX services in the southeastern US are at 98 days of burn and in the northeast at 71 days. Average stockpiles levels are 70 days in the southeast and 55 days in the northeast.
He added that it was "highly unlikely" that stockpiles would get to normalized levels this year, but noted CSX has received more calls from utilities in the past month to increase thermal coal shipments.
Eliasson said the recent increase in natural gas prices and uptick in coal volumes would have more of an impact on the 2017 coal business than near-term success. He said hot summer weather is helping coal burn, but the railroad does not expect inventory levels to be near normal levels until at least the early part of next year.
Officials said the railroad expects total third-quarter 2016 coal volumes of between 22 million st and 23 million st and for full-year volumes to be down about 25% from last year's total of 121.3 million st.
