A continued strong seaborne market for US coal boosted railroad CSX's third-quarter export coal tonnage by 60% year over year, while domestic shipments fell 12% mostly on poor utility demand.
CSX on Tuesday said Q3 seaborne volumes totaled 8.8 million st, up from 5.5 million st in the year-ago period. Metallurgical coal volumes were up 25% to 5 million st and thermal volumes surged 153% to 3.8 million st.
Fredrik Eliasson, chief sales and marketing officer, said during an earnings call the railroad believes there will be a solid seaborne market into 2018 based on expected prices.
"Where the forward curve is right now, it's a good opportunity for the US producers to participate next year as well," Eliasson said.
CFO Frank Lonegro said "global benchmarks support continued strength in export coal," and added that CSX sees fourth-quarter export volumes to remain similar to Q3 counts.
The railroad's domestic coal shipments slipped to 16.1 million st in Q3, down from 18.2 million st in the year-ago period. Utility tonnage fell 11% to 11.7 million st and shipments of coke and iron ore slipped 12% to 4.4 million st.
CSX attributed some of the loss in volumes to utility outages in the Southeast because of Hurricane Irma. Lonegro said some utility customers were shut down for days because of the storm, while a few experienced outages for multiple weeks.
Eliasson said CSX's "best expectation" for Q4 is for utility volumes to remain flat at Q3 levels.
"We're seeing a market that is in pretty good shape," Eliasson said "Clearly, this summer was not helpful, but we are still seeing natural gas prices around $3, which is very helpful. We'd like to have them a little higher, but is certainly more helpful than what we saw last spring."
Eliasson noted utility stockpiles in the north remain high, but inventories in the south are lower. He said the railroad should have an "opportunity to replenish some of those [utilities] in the south, which is usually a longer length of haul and higher revenue."
CSX Q3 coal revenues of $514 million were up 10% from the year-ago period, while revenue per unit gained 5% to $2,358. Total coal volumes for the quarter were up 5% from 2016 at 24.9 million st.
Overall, the railroad reported total Q3 earnings of $2.74 billion, up slightly from $2.71 billion in Q3 2016.
