Ann: Sale of Shares by Managing Director and CEO, page-125

China, the worlds workshop, is mostly under self-imposed COVID lockdowns. In my opinion they are a smoke screen to cool strong economic growth that is placing excessive strain on their energy sector (China imports most of its energy). Coking coal and iron ore have both seen reduced prices because of this main factor. When China eventually lifts its lockdown (which will likely be when they feel there is enough energy to meet demand) it will drive coking prices higher which will force or entice some producers to start mixing their product for the coking market.

It is essentially a locked-up demand vacuum waiting to be unleashed, either voluntarily by the CCP or from pressure by civil unrest, which is already increasing. Supply is struggling to keep up as it is, so when extra demand comes to market, we should expect thermal prices to remain stronger for longer.

When this demand is expected to return is a moot topic. Given recession fears, increased interest rates and depleted discretionary spending budgets of consumers, we could expect the worlds workshop to be producing fewer metal wants and needs for longer. I for one don't expect this to happen in the next 12 months. Higher fuel prices, for example, (like those of the 70s & 80s) will keep more people out of new car dealerships and reduce manufacture of cars, further reducing the need for steel and other industrial process'. This rule would apply to many manufacturing sectors.

The world would need to become more comfortable with the new energy price bands to emerge out of its economic glut. The key rule with energy is that you need it to emerge out of a recession but the more that you need it, the more its price becomes inflated, meaning it further fuels the recession you are in. Austerity and more efficient productivity are the key solutions, but they can be painful. A good leader would implement austerity to bring their nation out of negative growth within 12 - 36 months, but this good deed would not go unpunished.

We can attribute the recent dip in thermal prices to the lowering demand for coking coal to some extent. Many producers (WHC included) have been blending their coking coal for thermal boilers for the majority of 2022. Not only did this remove coal demand, but it added extra thermal tonnage to an already tight market. Nevertheless, thermal prices are still extraordinarily strong.