Ann: 2021 Annual Report, page-3

Outlook and likely developments
Outlook and likely developments Thermal and Metallurgical Coal Outlook Coal prices across both metallurgical and thermal segments have increased significantly from the lows experienced in mid-2020. The gc NEWC Index has more than tripled from the low of US$49/t in August 2020, to US$170/t for August 2021, while the API5 index is approaching its all-time high at approximately US$97/t. Spreads between gc NEWC and API5 indices have exceeded the record high of ~US$65/t in August 2021. Tendering from Asia-based customers remains active with increasing interest by customers to secure coal for CY22. Similarly the PLV HCC Index has more than doubled from lows of US$101/t in December 2020, and lifted other components of the metallurgical coal complex. Semi-soft coking coal has recovered to US$152/t, however at this level high CV thermal remains a more attractive option.

Availability of high CV thermal remains tight due to the strong demand from end users and coal producers/traders for coal blending with lower CV coal. Strong China coal demand, supported by increased economic activity and challenges in expanding domestic China coal production, compounded by China’s ban on Australian coal, have modified coal flows in the seaborne market and elevated seaborne coal prices to record levels.

On the supply side, there have been numerous disruptions recently. Indonesia has experienced heavy rainfall and equipment availability issues impacting production. Russian and South African exports have been impacted by rail and other logistical issues while Colombia has faced industrial action at Cerrejon in addition to the closure of Prodeco. Wildfires have also interrupted supply out of Canada and the USA and Australian supply has experienced weather events and logistics issues such as the outage of the NCIG shiploader.

All high quality, high CV thermal coal supply remains tight; prices are forecast to remain strong through CY21, CY22 and CY23.There are indications that China may cut steel 4. Operating and financial review (cont.) Whitehaven Coal Annual Report 2021 | 25 production in the second half of CY21 which may cause metallurgical coal prices to soften.