Global coal consumption is expected to remain broadly stable as rising electricity demand from EVs and data centres is offset by the continued expansion of renewables. The wildcard in the near term is the Middle East conflict, which has already provided a temporary boost — coal surged more than 20% in March as power generators across Asia and Europe switched away from gas, with Japan signalling plans to ramp up coal-fired generation to offset the energy shock. The longer-term direction of coal prices remains challenged – the energy transition, Chinese renewable buildout, and softening global steel demand are meaningful headwinds for both thermal and metallurgical coal through 2028. However, as we’ve seen recently, coal does deliver a degree of certainty for the global community as the move to renewables remains harder than many first thought.
MM has been active in the coal space through our WHC position over recent weeks: we trimmed our position well above $9 in late March. This was not a case of us losing confidence in WHC or the coal trade, but a recognition that miners are cyclical and, after being pushed to multi-year highs due to the war, it was prudent to take some money off the table, without losing our core position. With strong cash generation and buybacks helping underpin the WHC share price, we continue to like the stock, which could soon return to being the cash cow of yesteryear.
We are unlikely to increase our position into weakness, although if we had no position, we would be looking to buy/accumulate into dips below $8.
- We can see WHC consolidating between $8 and $8.50 over the coming weeks– MM is long WHC in our Active Growth Portfolio.
MM is long and bullish towards WHC around $8.50
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