The Whitehaven Coal Ltd (ASX: WHC) share price has rallied nearly 10% this morning after the miner released its June quarter report. Whitehaven revealed record coal production and sales in the June quarter. FY20 managed run-of-mine (ROM) coal production was 20.6 million tonnes (Mt) while managed coal sales were 17.5 Mt, achieving full year guidance.
What does Whitehaven Coal do?
Whitehaven Coal operates four mines in the Gunnedah Basin of New South Wales, three open-cut and one underground. The mines produce metallurgical and thermal coal for export to economies in North and South East Asia. Coal is used in energy generation and steel production. Whitehaven’s high-quality coal delivers among the lowest carbon emissions per tonne of coal consumed in the seaborne trade.
What did Whitehaven Coal announce?
Whitehaven released its June quarterly report today which showed record ROM coal production of 8.2Mt for the quarter, up 17% on the prior corresponding period (pcp). June quarter managed saleable coal production was 6.2Mt, up 29% on the pcp. Managed sales of produced coal increased 13% on the pcp to 5.3Mt. This meant Whitehaven Coal met its full year production and sales guidance.
CEO Paul Flynn said, “Despite drought, bushfires and COVID-19 it was great to finish the year so strongly and achieve our ROM and managed sales guidance. Against an uncertain global economic backdrop Whitehaven is focused on optimising existing operations and observing disciplined capital management”.
How has the Whitehaven Coal share price been performing?
The Whitehaven Coal share price fell 46% from its February peak of $2.67 to its March low of $1.42. Since then, despite recovering somewhat, the share price has not been able to reach its previous highs. This morning’s announcement has, however, seen the Whitehaven Coal share price rally 9.6% to its current price of $1.60 (at the time of writing). The company’s reduced share price overall has meant Whitehaven Coal was removed from the S&P/ASX 100 (ASX: XTO) in the most recent quarterly rebalance.
Bearish views on coal prices may account for the failure of the Whitehaven Coal share price to significantly rally since March. Coal prices have been under heavy pressure amid oversupply concerns. Production in Indonesia and Australia have remained strong despite weaker demand from China and India. The coal price has fallen from around US$75 per tonne at the start of the year to around US$50 per tonne currently. The rise of renewable energy sources, especially wind and solar power, is also putting downward pressure on coal prices.
Whitehaven Coal is scheduled to release its full year results next month. At the same time it will reveal FY21 coal production and sales tonnages, as well as capital expenditure and unit cost guidance.
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Motley Fool contributor Kate O’Brien has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
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