Why the Whitehaven Coal Ltd. share price is surging higher

Whitehaven Coal Ltd (ASX: WHC) in its September quarter update on Thursday announced that its coal sales surged 23% on last year’s figure to 4.7 million tonnes. The figure surpassed analyst forecasts of 4.2 million tonnes.

Whitehaven reported lower coal prices than analysts had forecast, selling its thermal coal at a 3.2% discount on the quoted average of $94 per tonne.

Shares fell 2.8% to $3.77 at close Thursday in response. Regardless, Whitehaven shares continue to trade around five-year highs, thanks to strong thermal coal prices, which have averaged US$92.5 a tonne since the beginning of the month.

The mining sector is expecting demand and prices for thermal coal to remain strong, supported by an increase of 8% in coal demand in China and demand for higher quality coal from Taiwan’s new power stations.

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Motley Fool contributor Nivine Bazzi has no financial interest in any company 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 Bruce Jackson.

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