Railways feel the brunt of commodities slump – by Eric Atkins (Globe and Mail – April 11, 2016)

http://www.theglobeandmail.com/

Canada’s two major railways are seeing the plunge in prices and demand for industrial commodities firsthand. The number of carloads hauled by Canadian Pacific Railway Ltd. and Canadian National Railway Co. has fallen more than 9 per cent this year, excluding container traffic.

The decline is led by a 29-per-cent drop in carloads of metallic ores and metals, and a 15-per-cent slump in coal, according to the Association of American Railroads (AAR), which includes U.S. operations of CN and CP. Carloads of oil and other petroleum products are down by 12 per cent.

Despite the declines in traffic, both carriers are expected to post higher profits this month, thanks to tight controls over costs, staffing levels and pricing power.

Slowing economic growth in China has hammered demand for iron ore and metallurgical coal. Thermal coal, used to generate electricity, has seen demand plunge as power plants around the world turn to natural gas, which is cheap and favoured by emissions regulators.

North American steel production fell 9 per cent in 2015, but mills in the United States boosted output 3 per cent, the World Steel Association said.

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