The Whitehaven Coal Ltd (ASX: WHC) share price has soared 264% year to date, but could it go any higher?
Whitehaven shares closed 1.96% lower at $9.50 today. The S&P/ASX 200 Index (ASX: XJO) also ended the day in the red, sliding 0.45% to close at 7180.8 points.
Let's take a look at the latest outlook for coal and how it relates to the Whitehaven Coal share price.
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What's the outlook for coal?
Whitehaven is a major ASX coal producer with four mines in NSW and two development assets in Queensland.
Against the backdrop of war between Russia and Ukraine, analysts at the ANZ are tipping coal demand to remain strong as European countries restart coal-fired power plants.
ANZ senior commodity strategist Daniel Hynes and commodity strategist Soni Kumari said in a recent research report:
Coal demand is likely to be sustained for another year or two as countries prioritise energy security over climate commitment.
The strategists are also tipping China's reliance on coal to increase as well, lifting the "price of seaborne coal". In an ANZ commodity report, Hynes and Kumari added:
Coal market tightness has persisted as Asian demand has risen because of a return to coal for electricity generation. And China's reliance on coal-fired power is likely to increase this winter, lifting the price of seaborne coal.
With energy security increasingly on its radar, Beijing is likely to resort to coal-fired power over winter. However, it may struggle to boost domestic supply enough to meet the country's needs.
An increase in demand naturally bodes well for ASX coal shares.
Whitehaven achieved an average realised coal price of $581 Australian dollars in the September quarter. Commenting on the coal price in a quarterly report released in October, Whitehaven CEO Paul Flynn said:
With demand for high quality coal continuing to outstrip global supply, coal prices set another record in the September quarter and continue to be well supported.
Whitehaven Coal share price snapshot
Shares in Whitehaven Coal have soared nearly 296% in the past 12 months, as shown in the chart below.
This ASX coal share has a market capitalisation of $8.57 billion based on today's closing price.
