Why are Whitehaven (ASX:WHX) shares falling despite rising coal prices?

2 min read | June 17, 2022 05:48 PM AEST | By Sukriti Nair

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Why are Whitehaven (ASX:WHX) shares falling despite rising coal prices? — Image source: © 2022 Kalkine Media ®

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Highlights

Coal producer Whitehaven Coal Ltd’s shares fell nearly 6% on Friday

The stock has fallen nearly 7% in this week

Fresh Covid-19 restrictions announced in major Chinese cities have clouded demand outlook for coal

Whitehaven Coal Ltd (ASX:WHC) shares have closed the week’s trade on a lower note. WHC shares last exchanged hands at AU$5 a share, down 5.81% on Friday. Lacking any new announcements on ASX, Whitehaven shares were seen following the broader market trend. Today even the ASX200 Energy sector index (XEJ) and the ASX300 Metals and mining index (XMM) were in the red territory. Over the past five trade days, WHC share price has slipped by nearly 7%.

Is Whitehaven share impacted by coal prices?

Coal prices were tending upwards on Friday, pushed by a strong global demand and an ongoing energy crisis. However, coal producer Whitehaven failed to capture the trend. While there was no price sensitive announcement by Whitehaven, it seems energy transition in Australia is weighing on the stock. Paul Flynn, CEO, Whitehaven Ltd. was seen expressing his concerns of the Australian economy no longer needing coal producers to back its energy needs.

Meanwhile fresh Covid-19 restrictions in major Chinese cities seems to have clouded demand outlook for coal and is weighing on shares on miners.

How were other energy and coal stocks placed?

Both energy and material sectors closed the day’s trade in red. The ASX200 energy sector index was down 1.58% on Friday. Meanwhile the ASX200 Materials sector index (XMJ) was 2.78% lower and ASX300 metals and mining index (XMM) was down 2.83%.

Whitehaven’s peer on ASX Yancoal Australia Limited (ASX:YAL) also closed trade 4.01% lower. Other coal focused companies New Hope Corporation Limited (ASX:NHC) and Stanmore Resources Limited (ASX:SMR) were also down 3.17% and 1.35%.

Bottom line

Since the Australian materials sector was the biggest loser on Friday, commodity prices hike could not help ASX listed stocks. This was visible in case of coal miners including Whitehaven Coal Limited. While coal price was looking north, WHC share price trailed south. The shift in Australia’s energy needs from coal to other cleaner sources also looked like a reason to push WHC share price in red zone.

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