Why the Whitehaven (ASX:WHC) share price is gaining on Friday

Whitehaven shares have stepped into the green today. Here's the details.

| More on:
A coal miner wearing a red hard hat holds a piece of coal up and gives the thumbs up sign in his other hand

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The Whitehaven Coal Ltd (ASX: WHC) share price has stepped into the green during afternoon trade on Friday.

Whitehaven shares are currently changing hands at $3.01 apiece, a 2.4% gain on the day.

Let's investigate further.

What's behind the Whitehaven share price today?

One factor that could be weighing in on the Whitehaven share price is the price of coking coal surging to 5 year highs yesterday.

Coking coal is a compound that is used in steel and is actually a crucial ingredient in steel's flavour profile.

Despite a run of recent measures imposed by Chinese authorities to curb steel production, prices of several other commodities have increased, including coking coal and even iron ore.

One other factor causing the near-term spike is the forced closure of the Wangjialing underground coking coal mine for 6 months after a worker was killed there on 2 September.

The output will undoubtedly put a dent in Chinese output of coking coal, as more than 60% of domestic production comes from the Shanxi province, where the mine is located.

In addition to this, a series of other unfortunate events have plagued supply and manufacturing chains around the globe, sparked by pandemic-induced lockdowns.

As a result, the price of coking coal was fetching more than US$300/tonne from yesterday, the first time it had reached that level in 5 years.

Whitehaven has exposure to coking coal, also known as metallurgical coal, as it is a major Australian exporter of the product.

Given it is also an ASX resource share that produces commodities, it is also considered a price taker, which means its share price is sensitive to fluctuations in the broader commodity markets.

Given this rapid surge in the market price of coking coal, it starts to make sense why the Whitehaven share price is in the green today.

Whitehaven share price snapshot

The Whitehaven share price has climbed 83% this year to date, extending the return over the last 12 months to 256%.

These returns have far outpaced the S&P/ASX 200 index (ASX: XJO)'s return of around 25% over the past year.

The author Zach Bristow has no positions in the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on Share Gainers

Two happy excited friends in euphoria mood after winning in a bet with a smartphone in hand.
Share Gainers

Why Fortescue, Lynas, PEXA, and Regis Healthcare shares are charging higher

These shares are having a strong session on Thursday. But why?

Read more »

A young man talks tech on his phone while looking at a laptop. A financial graph is superimposed across the image.
Share Gainers

Why Capricorn Metals, Insignia, Perseus Mining, and Qoria shares are storming higher

These shares are having a strong session on Tuesday. But why?

Read more »

A man clenches his fists in excitement as gold coins fall from the sky.
Share Gainers

Why Amaero, AMP, Block, and South32 shares are racing higher today

These shares are starting the week on a positive note. But why?

Read more »

Ten happy friends leaping in the air outdoors.
Share Gainers

Here are the top 10 ASX 200 shares today

It was another momentous session for ASX shares this Friday.

Read more »

Overjoyed man celebrating success with yes gesture after getting some good news on mobile.
Share Gainers

Why BHP, Catalyst Metals, Mesoblast, and Pilbara Minerals shares are shooting higher

These shares are ending the week with a bang. But why?

Read more »

Doctor doing a telemedicine using laptop at a medical clinic
Healthcare Shares

The Mesoblast share price just rocketed 38%! Here's why

ASX investors just sent the Mesoblast share price up 38%. But why?

Read more »

A businessman stacks building blocks.
Share Gainers

Here are the top 10 ASX 200 shares today

ASX shares hit a new record high today.

Read more »

A man sees some good news on his phone and gives a little cheer.
Share Gainers

Why Auckland Airport, Australian Ethical, Breville, and Clarity shares are charging higher

These shares are having a better day than most on Thursday. But why?

Read more »