Why is the Whitehaven share price crumbling 6% on Friday?

It’s a rough day for Whitehaven Coal investors.

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Key points

  • The Whitehaven Coal share price is tumbling nearly 6%, slipping to trade at $5.01
  • That makes it the ASX 200 energy sector's worst performer on Friday
  • Interestingly, its dip comes despite one expert upping its expectations for the price of coal in 2022 and 2023

The Whitehaven Coal Ltd (ASX: WHC) share price is underperforming on Friday despite no word having been released by the company.

In fact, there’s been positive news regarding the price of coal, with one expert increasing its 2022 price target for the commodity by 22.7%.

At the time of writing, the Whitehaven share price is $5.01, 5.91% lower than its previous close.

For context, the S&P/ASX 200 Index (ASX: XJO) is currently down 2.09% while the S&P/ASX 200 Energy Index (ASX: XEJ) has slumped 2.14%.

Let’s take a closer look at what might be going on with the ASX 200 coal share on Friday.

Coal price upgraded amid Australia’s energy crisis

The Whitehaven Coal share price is struggling on Friday despite positive sentiments about the price of coal.

 Finch Ratings has lifted its price expectations for Newcastle thermal coal in 2022 by US$50 to U$270 per tonne. It also upped its 2023 expectations by US$16 to US$120 per tonne.

“Our increased thermal coal assumptions for 2022-2023 reflect high [year to date] prices,” the ratings provider said. It continued:

[Prices have been] supported by tight supply due to the Australian wet season, strong Indian demand mitigating lower demand in China, and structurally higher prices of Newcastle 6,000. However, Australian supplies will eventually recover, while India and China have increased imports from Russia, helping meet recovering Chinese demand.

Newcastle coal futures are trading at US$395 a tonne on Friday, according to Trading Economics.

Whitehaven is also in the news due to comments reportedly made by its CEO Paul Flynn on Australia’s energy crisis.

The coal producer’s boss reportedly told the Australian Financial Review ESG Summit the crisis was born from the push to ditch coal which indirectly led to outages at coal-fired power plants. In an article published yesterday afternoon, the publication quoted Flynn as saying:

If you tell the people who are backing you up that you no longer need their services, and you’ve only got five years to remain, they will start to unwind the maintenance programs …

I think we do have to chart a sensible pathway to a just transition here, because the way we are currently configured is giving everybody unfortunately a very bumpy road.

How is the ASX 200 energy sector performing on Friday?

The ASX 200 energy sector has underperformed the broader market for much of Friday. Its fall is currently led by the Whitehaven share price.

In the coal producer’s shadow are the share prices of Santos Ltd (ASX: STO) and Beach Energy Ltd (ASX: BPT). They’re down 3.2% and 2.6% respectively.

Meanwhile, Viva Energy Group Ltd (ASX: VEA)’s stock is the sector’s best performer, having slipped just 0.36%.   

Whitehaven Coal share price snapshot

Fortunately, today’s dip hasn’t been enough to undermine the Whitehaven Coal share price’s year-to-date gains.

The stock has lifted 82% since the start of 2022. It’s also nearly 178% higher than it was this time last year.

Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. 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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