CSX Shipment Down Because Coal Prodution is Curtailed
Some one tries to make a logically weak postulation and suggested that as CSX (railway) shipment of coal is down, the demand must be weak.
CSX shipment is not related to demand, but related to SUPPLY. Us coal producers continue to contail coal production by about 10%. So OF COURSE the CSX shipment is down 10%. What else do you expect? Do you expect CSX to ship coal that has not been produced?
So CSX shipment down is bullish news. It means the supply side continue to be curtailed even as demand side has recovered.
It has nothing to do with curtailing of coal production. I believe the shipment of coal is down is because excess inventory from utilities still need to be worked off. Listen to the CEO of CSX (Michael Moore) interview this AM on CNBC. Still long ACI but might have to wait another 6-12 months to cash in my shares.
Once again production cuts and curtailments brings down supply so it is bullishfor the sector.
As of now, coal demand in the electric power sector largely recovers to normal elvel already, but coal production continues to be curtailed by 10% or more. The supply/demand fundamental is thus tipping towards a supply tighten up, which is bullish.