UBS has upgraded its 2026 benchmark price forecast for premium low vol coking coal by 17% to $235 per tonne, citing ongoing supply disruptions and strong demand from India.
Spot prices for steelmaking coal have increased by over 15% since early December to above $230/t, their highest in 12 months, driven by wet weather and operational issues in Australia and Canada.
UBS now sees spot prices peaking near $250/t in the first quarter before easing to around $220/t in 2027.
The Swiss bank highlighted ongoing force majeures in Queensland and delays in mine restarts. “We expect it to take several weeks for exports to normalise but risk remains over H1-26 in mine clean-up and restarts.”
On equities, UBS favours US coal producers over Australian peers, where analysts remain more cautious due to the Queensland royalty limiting upside leverage relative to North American operators.
UBS expects over 10Mt of new supply to come online in 2026.
The top pick is US-listed Core Natural Resources, the only metallurgical coal stock rated ‘buy’ by UBS, with exposure to metallurgical coal and cautious downside risk for Q4 2025.
Warrior Met Coal, another US-based metallurgical coal miner, is rated ‘neutral’, but noted by UBS for its strong leverage to met coal prices despite valuation concerns.
Peabody Energy, a more diversified US producer, is also rated ‘neutral’, with exposure to seaborne markets and medium- to long-term growth potential.
Aussie-listed BHP Group is rated ‘neutral’, with coal contributing around 5% of earnings; UBS flagged downside risk to its BMA coal volumes in 2026 due to recent wet weather.
