Why is Whitehaven Coal (ASX: WHC) enjoying its best day in 11-months?
Why the coal price is rallying and what it means for ASX investors
Whitehaven Coal (ASX: WHC) surged more than +7% on Monday afternoon, hitting seven-week highs as traders repriced the stock, and fellow ASX coal miners, on emerging supply disruption from China.
What’s driving the move
The catalyst is the slow realisation that a recent gas explosion at a coal mine in China’s Shanxi province is likely to materially disrupt Chinese coal supply. President Xi Jinping has ordered a nationwide industrial safety inspection across China’s coal sector, a directive that could easily tighten domestic output, exerting upward pressure on global coal prices.
Options market signals growing bullish conviction
ASX call option volume on WHC is trading at triple its average for this time of day — a telling signal that traders and investors who were previously short are being forced to cover, while fresh money is positioning for further coal price upside in the months ahead.
Market Matters view
MM remain long and bullish Whitehaven Coal (WHC), targeting a break above $10.00. The combination of Chinese supply disruption, elevated thermal coal demand from Asia, and improving balance sheet quality makes WHC one of the most compelling commodity/energy trades on the ASX right now.
