BY JARRETT RENSHAW March 4 Wed Mar 4, 2015
(Reuters) – CSX Corp has softened its growth projections for crude rail shipments as a sustained price slump has weakened demand, a company executive said Wednesday.
In January, company executives were optimistic that the rout in U.S. crude oil prices – which have been slashed by more than half since the summer – would not put a halt to its growing crude rail business, which has surged in recent years thanks to high demand from East Coast refiners.
But at two recent public events, the latest at JP Morgan’s Aviation, Transportation & Industrials Conference in New York on Wednesday, company executives said things have changed.
“Our crude growth will continue, but probably not at the level that we had originally anticipated due to the lower crude prices,” Chief Financial Officer Fredrik Eliasson said.
Last month, Eliasson said in a speech that customers have told the company that low crude oil prices are weakening demand, putting downward pressure on growth.
CSX spokeswoman Melanie Cost said that despite the weakening projections, the company still expects year-over-year growth, but at a “more moderate pace than we’ve seen the past several years and more moderately than originally anticipated.”
The company does not disclose detailed projections for its crude rail business, which more than doubled in 2014, according to a presentation by CSX at the New York conference on Wednesday. (Reporting by Jarrett Renshaw in Philadelphia; editing by Matthew Lewis)