Coking and Thermal coal prices...where are we going?, page-820

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LambDownUnder

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07/06/25

13:27

Post #: 79356144
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Originally posted by Centuron: ↑

Someone asked me my opinion of thermal coal prices on the YAL section, and I made the following post. I'm more than happy to entertain criticism. By way of background, I've never owned WHC shares, but I have and still do continue to own some YAL shares.

I'd also make one extra point -- part of the motivation in China to increase local coal production is that substantial workers depends on the coal mining industry in some regions.

Here is the post below:

Frankly, I believe the coal market is highly unpredictable. Personally, I’m not optimistic about prices returning to their previous highs. When prices dropped and stayed low, many attributed it to stockpiling, but that explanation was never particularly insightful.

More importantly, there has been a notable increase in supply — especially from China and India — which has reduced their reliance on coal imports. Even if a particular coal miner doesn’t sell directly to these countries, their reduced import demand affects global coal prices. While much of the coal produced domestically by China and India is of lower quality, it’s still sufficient to fuel power plants.On the demand side, the picture is also shifting. I've always been sceptical of the claim that "renewables are cheaper" — a line often repeated without context. While China (and others) typically prioritise economics, they have still invested heavily in renewables, partly due to international pressure. This isn’t to say they’ve turned away from coal — far from it — but renewables are slowing the growth in coal demand.This moderation comes in several forms. The most effective renewable hydro due to its non-intermittent nature and has benefited from significantly higher rainfall in 2025 compared to 2024. Meanwhile, although most renewables are intermittent (and batteries way too expensive to smooth things out at a major level), some coal-fired plants are now able to ramp up or down to accommodate them, improving overall system flexibility. Admittedly, there’s an efficiency cost, and coal still lags LNG in responsiveness speed and ability.

That leads to another key factor: LNG is a growing threat to coal. It emits roughly half the CO₂ per unit of energy and is better suited for balancing intermittent renewable supply. I’m not making a climate change argument here — just noting that even China and India face internal and external pressure to reduce emissions.Do I still believe coal is often the cheapest form of power if cost were the only factor? Yes. But cost is no longer the sole consideration for policymakers.

https://www.economist.com/china/2025/05/29/chinas-carbon-emissions-may-have-peaked

None of which is to say that coal companies won't remain profitable in certain cases, the issue is (as always) the degree of their profitability compared to their share price.

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one of the reasons ive backed whc more than say nhc (i do own both) is the mostly met coal exposure.

there will be a bit of awakening in the coming years in aust i think when we discover our coal stations remain operational far longer than a lot are currently pricing in.

im not as bullish on the seaborne thermal market, but local producers next to power stations will be fine.

WHC Price at posting: $5.79 Sentiment: Buy Disclosure: Held
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Last $5.87		Change 0.135(2.36%)		Mkt cap ! $4.910B

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