Whitehaven Coal Share Price Up 4% on Updated Guidance (ASX:WHC)

ASX-listed coal producer Whitehaven Coal Ltd [ASX:WHC] is up 4% today. Shares for the company were trading at $1.82 at time of writing, after the company updated their coal sales guidance for this year.

What did the company say?

The company suffered a string of issues during 2020.

In November, a storm damaged one of their ship loaders in Port of Newcastle which Whitehaven uses to export coal. The reduction in capacity affected 550 kilotonnes of produced coal sales in December.

Then there were the coal import restrictions from China, which has sent the company looking for alternative markets in places like India and Pakistan.

Then add the fact that coal prices slipped in the middle of the year, with Whitehaven achieving an average realised price of US$62/t for thermal coal for the December quarter, lower than the US$66/t they got in the same period the previous year.

Still, Whitehaven increased their managed sales of produced coal by 15% in the December quarter compared to last year.

The company is expecting better things for next year

For one, coal prices have been increasing, mainly because of Asian economies recovering and a lower supply around.

As Managing Director and CEO Paul Flynn said in the announcement:

During the latter part of the December quarter there was a strong rebound in pricing and we are increasingly optimistic that underlying market dynamics are supportive of continued improvement in this area.

But they’re also expecting higher sale volumes this year, which they anticipate ‘to return to pre-COVID-19 levels.

The company updated their FY21 guidance today too, with expecting sales for the year to be between 19–20 tonnes, up from the previous guidance of 18.5–20 tonnes.

While Whitehaven Coal may be looking at some gains today, there’s still a lot of doubt out there about the future of coal with renewables pushing through and some of our largest coal customers shifting towards low-carbon economies.

It’s why we think there are better investments out there.

Check out Editor Greg Canavan’s new report ‘Five Bounce Back Stocks to Watch during the Market Crash’. In this free report, Greg gives you five stocks he believes will survive the pandemic.

You can access this free report here.


Selva Freigedo

Selva Freigedo is a research analyst for The Rum Rebellion.

Born in Argentina, her passion for economic analysis started at a young age. Her father was an economist for the Argentinean governments and the family used to discuss politics and economics at the dinner table.

Argentina is a country with an unusual economic history. Growing up there gave Selva first-hand experience on different economic phenomena such as hyperinflation, devaluation and debt default.

Selva has also lived in Brazil, Spain and the USA.

Back in 2000 she was living in the US as the dot com bubble popped…
And in 2008 she was in Spain as the property market exploded and then collapsed…

She has seen first-hand what happens when bubbles burst.

Selva joined Fat Tail Investment Research’s team in 2016, as an analyst. She now writes from her vantage point in Australia, where she settled in 2015.

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