{"id":262,"date":"2020-03-02T12:04:26","date_gmt":"2020-03-02T17:04:26","guid":{"rendered":"http:\/\/pflpetroleum.com\/reports\/?p=262"},"modified":"2023-07-28T11:07:47","modified_gmt":"2023-07-28T15:07:47","slug":"pfl-railcar-report-3-2-2020","status":"publish","type":"post","link":"https:\/\/pflpetroleum.com\/reports\/pfl-railcar-report-3-2-2020\/","title":{"rendered":"PFL Railcar Report 3-2-2020"},"content":{"rendered":"\n
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\u201cDon\u2019t gain the world and lose your soul.\u201d<\/strong><\/p>\nBob Marley<\/cite><\/blockquote>\n\n\n\n

Folks,  it was a really bad week last week for commodities and equities  – <\/strong>a historic sell off,  all related to the coronavirus outbreak (\u201cCOVID-19\u201d ) took place as you are all aware.  Demand destruction continues <\/strong>and public companies have come out with earning warnings including Apple and Microsoft.   Last week was the worst week since the financial crisis – Futures in New York fell 16 percent this week, marking the biggest weekly drop since December 2008. (see  one year chart)<\/strong><\/p>\n\n\n\n

Market Summary > Dow Jones Industrial Average<\/strong><\/h3>\n\n\n
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\"Dow<\/figure>\n<\/div>\n\n\n

The COVID-19 outbreak shows\nno signs of letting up,<\/strong> with the World Health Organization raising\nglobal risk to \u201cvery high\u201d from \u201chigh.\u201d The collapse of financial markets\nprompted U.S. Federal Reserve Chairman Jerome Powell to assure investors that\nthe central bank is prepared to cut interest rates to mitigate COVID-19 threat\nto economic activity.<\/p>\n\n\n\n

Oil prices have tumbled almost 27% <\/strong>this year on concerns that the COVID-19 outbreak will dent crude demand and it has. OPEC and its allies have signaled the coalition could reach an agreement to stem falling prices before meeting in Vienna later this week. Saudi Arabia is reportedly pushing for collective OPEC production cuts of an additional 1 million barrels a day, <\/strong>of which it would bear the most of those cuts.  This may not be enough.  <\/strong>Libya production is rumored to come back online soon which is roughly 1 million barrels of oil per day.<\/p>\n\n\n\n

WTI  for April delivery fell $2.33, <\/strong>or five percent, on Friday to settle at US$44.76 per barrel on the New York Mercantile Exchange.    The crude market is trading in backwardation.  Ethanol at Argo traded down to $1.25 per gallon on Friday rattling Ethanol producers across the country that are already operating on razor-thin margins.  Natural gas closed at $1.684 per MMBTU <\/strong>for April delivery on Friday \u2013 folks this is almost free <\/strong>(at least the Natgas market is contango \u2013 nice spread between April and December if you have storage)<\/p>\n\n\n\n

President Trump authorized new travel restrictions and warnings Saturday<\/strong>  and said he\u2019s even looking at closing the southern border in response to the COVID-19 outbreak that has claimed the first American life over the weekend, while assuring the nation at an all-hands-on-deck press conference there\u2019s \u201cno reason to panic.\u201d<\/strong>  President Trump also warned that there will be more infections and in fact there has been.  Shortly after his speech to the nation on Saturday at 1:30 EST and elderly nursing home in Washington State announced several cases with one 70 year old women in critical condition.<\/strong><\/p>\n\n\n\n

The number of confirmed cases around the globe passed 85,000 on Saturday,<\/strong> according to a tracker maintained by Johns Hopkins University, and more than 2,900 infected people have died.<\/strong> While the virus\u2019s growth appeared to slow in China last week, it was accelerating elsewhere, with many new cases linked to an outbreak in Italy.  On Sunday Scotland and the Dominican Republic announced cases of COVID-19.<\/strong>  COVID-19 has now infected 60 countries and Sundays update showed over 90,000 people infected.<\/strong><\/p>\n\n\n\n

How prepared is the U.S. for\nan outbreak? <\/strong>It\u2019s better positioned than most countries, according to\nexperts, though there could be shortages of ventilators and protective\nequipment. The most important thing you can do: Wash your hands often.<\/strong><\/p>\n\n\n\n

For week\n8, total U.S. weekly rail traffic was 482,690 carloads and intermodal units,\ndown 7.6 percent compared with the same week last year.<\/strong><\/p>\n\n\n\n

Total\ncarloads for the week ending February 22 were 232,869 carloads, down 9.3\npercent compared with the same week in 2019,<\/strong> while U.S. weekly\nintermodal volume was 249,821 containers and trailers, down 6 percent compared\nto 2019.<\/p>\n\n\n\n

Four of\nthe 10 carload commodity groups posted an increase compared with the same week\nin 2019.<\/strong> They included chemicals, up 2,366 carloads, to 33,284;\npetroleum and petroleum products, up 1,217 carloads, to 13,401; and motor\nvehicles and parts, up 1,193 carloads, to 17,898. Commodity groups that posted\ndecreases compared with the same week in 2019 included coal, down 23,225\ncarloads, to 63,540; grain, down 2,785 carloads, to 18,909; and nonmetallic\nminerals, down 1,628 carloads, to 29,854.<\/p>\n\n\n\n

For the\nfirst eight weeks of 2020, U.S. railroads reported cumulative volume of\n1,858,165 carloads, down 6.5 percent from the same point last year; and\n1,999,804 intermodal units, down 6.2 percent from last year.<\/strong> Total\ncombined U.S. traffic for the first eight weeks of 2020 was 3,857,969 carloads\nand intermodal units, a decrease of 6.4 percent compared to last year.<\/p>\n\n\n\n

North\nAmerican rail volume for the week ending February 22, 2020, on 12 reporting\nU.S., Canadian and Mexican railroads totaled 329,343 carloads, down 6.7 percent\ncompared with the same week last year, and 324,723 intermodal units, down 7.3\npercent compared with last year. <\/strong>Total combined weekly rail traffic in\nNorth America was 654,066 carloads and intermodal units, down 7 percent. North\nAmerican rail volume for the first eight weeks of 2020 was 5,278,276 carloads\nand intermodal units, down 4.7 percent compared with 2019.<\/p>\n\n\n\n

Canadian\nrailroads reported 76,331 carloads for the week, up 1.9 percent, and 56,299\nintermodal units, down 14.9 percent compared with the same week in 2019. For\nthe first eight weeks of 2020, Canadian railroads reported cumulative rail\ntraffic volume of 1,121,322 carloads, containers and trailers, down 1.7\npercent.<\/strong><\/p>\n\n\n\n

Mexican\nrailroads reported 20,143 carloads for the week, down 6.4 percent compared with\nthe same week last year, and 18,603 intermodal units, up 1.1 percent. <\/strong>Cumulative\nvolume on Mexican railroads for the first eight weeks of 2020 was 298,985\ncarloads and intermodal containers and trailers, up 8.9 percent from the same\npoint last year.<\/p>\n\n\n\n

Amidst\nthe COVID-19 induced market volatility, we are expecting lowered guidance from\nthe railroad management teams on earnings.<\/strong> Rail networks can manage a\npotential snapback in activity if a post COVID-19 surge coincides with a\nrecovery. Adopting PSR likely\nprovides networks with better flexibility to manage a volume recovery<\/strong>\nand creating capacity through more efficient operations. Therefore do not\nexpect a deluge of volume will overwhelm the U.S. networks.  Hold\non think we are in for a little bit of a ride. <\/strong><\/p>\n\n\n\n

North American Rig count is down 5 rigs week over week<\/strong> with the U.S. losing 1 rig and Canada losing 4 rigs week over week.  Year over year we are down 219<\/strong> Rigs collectively.<\/p>\n\n\n\n

North American Rig Count Summary <\/strong><\/h3>\n\n\n
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Source: Baker Hughes<\/strong><\/figcaption><\/figure>\n<\/div>\n\n\n
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PFL is seeking: <\/strong>23.5Ks and 25.5Ks for fuel oil products, 117s with magnetic gauging devices for lease, 89 ft flat cars for purchase, 100 mil gons for short term lease, 117Js last in ethanol, and 4750s for use in coke service. <\/p>\n\n\n\n

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