CSX expects continued coal challenges in 2025

Spanish Market: Chemicals, Coal, Coking coal, Crude oil, Electricity, Natural gas, Petrochemicals
23/01/25

Eastern US railroad CSX is expecting coal market weakness to linger into this year, weighing on the company's overall volumes.

A large part of the coal volume decline could come this quarter because of production issues at some mines, CSX executives said today. Later on in 2025, coal-fired power plant retirements may weigh on CSX's domestic coal volumes.

The carrier did not give specific volume guidance for 2025. CSX hauled 82.7mn short tons (75mn metric tonnes) of coal in 2024, down by 3pc from 2023. The railroad's domestic coal shipments dropped by 14pc to 38.9mn st and offset a 9pc increase in shipments to export terminals, marking the first time in the company's history that more than half of CSX's coal carloads were headed to export terminals.

In the fourth quarter, both CSX's domestic and export coal volumes were lower when compared with a year earlier. CSX loaded 9.6mn st of coal headed to domestic customers last quarter, down from 10.9mn st in the final three months of 2023. The railroad's export coal volumes dipped to 10.5mn st from 10.8mn st.

CSX attributed the fourth quarter year-on-year declines to reduced production, including planned and unplanned outages at customer facilities. The company also "navigated the effects" of lower seaborne coal pricing and continued to encounter lower domestic demand, primarily from utility customers, CSX chief commercial officer Kevin Boone said.

"More recently, we have seen colder winter weather reducing coal utility stockpiles", which could provide some opportunity for domestic utility coal inventory rebuilding in the short term, Boone said. But upcoming power plant retirements will hit CSX's domestic coal shipments, and production issues will drag on overall coal volumes in the first half of 2025.

CSX did not name the mines experiencing production problems. CSX services Core Natural Resources' Leer South metallurgical coal mine in West Virginia, which was recently taken off line as the company works on and recovers from a fire that started on 13 January.

CSX also expects lower seaborne coal prices to drag down the company's revenue in the first half of 2025. The railroad's fourth quarter coal revenue fell by 20pc to $499mn and full year 2024 revenue decreased by 10pc to $2.25bn. Average revenue per coal railcar in the fourth quarter decreased by 14pc to $2,788/car.

In addition to decreased volumes and seaborne prices, CSX's fourth quarter coal revenue was negatively affected by disruptions from the aftermath of Hurricane Helene, which hit the US southeast at the end of September, and Hurricane Milton in early October.

The storms also affected the company's overall fourth quarter revenue and service metrics. CSX's intermodal trip plan performance — which compares actual movements to the railroad's plans — averaged 84.9pc, compared with 94.7pc a year earlier. The company's carload movements were about 75.5pc of what it had planned, down from 84.7pc in the final three months of 2023.

Still, CSX's overall railroad volume last quarter rose by 1pc from a year earlier, to 1.58mn carloads and intermodal units such as chemicals, minerals and intermodal shipments topped fourth quarter 2023 levels.

CSX attributed the gains in chemicals shipments to increased volumes of plastics, crude oil, and natural gas liquids. The company's international intermodal volumes were supported by higher port volumes and "growth with key customers", while CSX's domestic intermodal shipments increased primarily because of growth in transcontinental shipments. CSX automotive shipments declined.

Total CSX revenue for the quarter decreased by 4pc to $3.54bn because of lower fuel surcharges, and coal revenue outweighed gains in merchandise and intermodal volume growth.

For all of 2024, CSX's volume was 2pc higher than in 2023, at 6.28mn carloads and intermodal units, while revenue dipped by 1pc to $14.5bn.

CSX cycle times in 2025 are likely to be greater than they were last year, when Helene and Milton and the March collapse of the Francis Scott Key Bridge in Baltimore, Maryland, temporarily disrupted traffic.

By Courtney Schlisserman

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13/03/25

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