A good questions as to what will happen with china demand for...

A good questions as to what will happen with china demand for Australian coal and the future of international trading prices but not an easy one to answer.

so to start to answer your question with my opinion..., i would focus on thermal coal as that is what WHC are mainly in and what they mainly sell. coking coal have different market dynamics linked with construction, auto sales etc and steel demand in china is very political as they can build empty cities just to keep the domestic economy purring along when international demand for their exports are weak.

thermal coal - china is both a large producer and consumer so what they do heavily impacts on the international export pricing. historically they have been a swing buyer of this - ie if the price is right they will buy it rather than increase their production to meet the demand. they can buy cheap Indonesian low calorie and ash and sulfur coal and burn it cheaper than they can mine it - but people are getting tired of the pollution generated particularly in the north and beijing regions. then there is the issue of the cost curve - different mines have a different cost so the pricing generally has bottomed out when around 30-50% of the export oriented mines begin losing money (the price drops below their cost of production). now at that point what they do is important for the future of the coal price. if they lower their costs then the price may drift down, if they shut (temporarily or permanently) then there it can re-balance the supply demand market and if sufficiently tight then pricing starts to rise. that will be the big unknown factor going forward. Variables include:

Demand side factors:
1. how long will it take to get on top of the virus and get back to a more normal energy consumption pattern (note some experts are saying we are 1 yr into a 4yr pandemic as a worst case scenario while on the other extreme the worst is behind us as medical tools available improve and governments get a handle how to manage without full shut downs).
2. Weather - when will it warm up and how hot will the nth hemisphere summer be (air conditioners use more power to cool than to heat).
3. what contribution will come from renewables - a simple example of this erratic variable is that when it rains heavy in china, they can produce huge amount of hydro energy.
4. etc etc

Supply side factors:
1. The discipline of producers to ramp up production
2. natural factors such as weather events that hamper production
3. political factors such as approvals for new projects, climate policies particularly of the new biden administration
4. the amount of substitution of gas into power stations that can operate different fuels
etc etc

While it will be a bumpy ride due to the nature of wild swings in coal prices, my personal view is that WHC will be a long term success as a pure coal play due to:

1. the quality of its coal product being well suited to the high efficiency coal fired plants more recently built and having 20yr+ lifetimes
2. the quality of its customer base - japan and Korean utilities rather than fickle Chinese traders
3. the quality of its reserves - long life and the ability to develop more production when the market and its balance sheet allows
4. the location of its mines (that is a long story in itself)

apologies at the long post but wanted to give a fair go at some of the issues to be considered