“Automotive was a key driver in the industrial sector, growing 27% as North American light vehicle production increased 25% in the quarter. The chemicals market grew 1% with the frac sand and petroleum products being the primary drivers.
“In the construction sector, growth in building products was offset by a decline in aggregate shipments due to the completion of several stimulus projects.
“In the agricultural sector, volume declined across all major commodities. Corn shipments to the Southeast for animal feed were lower as a strong local wheat crop displaced Midwestern corn. Phosphate shipments declined as buyers delayed purchases in the expectation of moderating commodity prices. Finally, ethanol shipments softened as a result of lower gasoline demand. Looking forward, the Automotive market will continue to drive growth in the industrial sector. In addition, we continue to see growth opportunities in chemicals and Metals, particularly in commodities that support the oil and gas industry. In the construction sector, aggregate shipments will remain challenged, while recovering housing starts will drive continued growth in building products. Finally, we expect the agricultural sector to be stable with an increase of phosphate shipments being offset by a lower ethanol demand.”Coal revenue declined 14% as strength in Export Coal partially offset significant weakness in utility coal volume. Domestic utility tons declined 37% as natural gas prices remain low, leading to the continued displacement of coal at some utilities. In addition, electrical generation declined in the Eastern United States. Partially offsetting this weakness, export coal volume grew 41% to 14.7 million tons in the quarter as demand was strong for U.S. thermal coal.
“Looking ahead, even though the market for export coal is volatile, we clearly expect to exceed the ton shipped in 2011 as the demand for U.S. coal will remain strong in the second half although not at the level we saw in the first half. At the same time, domestic utility volumes are expected to face continued challenges due to low natural gas prices, above normal inventory levels and environmental regulations. Headwinds should begin to moderate somewhat through the balance of this year.
“And if you look at the average age of the automobiles and the light trucks in the United States, they’re some of the highest numbers that they’ve been post-World War II. The ability to secure financing and particularly longer-term financing in the range of 6 years has proved to be positive for the consumers as they go to purchase automobiles. Chrysler, for example, are adding third shift to their Belvidere plant. Hyundai Montgomery is adding third shifts to their plant. So I feel nothing but positive things about the automotive industry as we go forward.”