UBS has thrown a bone to metallurgical coal producers, suggesting prices should hold up over the next twelve months as Indian steel production ramps up, China demand recovers and restocking kicks in.

Supply growth is expected to be modest, with recent sanctions on Russian producers to impact trade flows and new investment in growth and depletion-replacement challenging.

“As a result, we upgrade our long-term met-coal price to $200/t to reflect cost inflation and a higher price needed to incentivise investment in replacement mines.

“We expect the market to move back into surplus in 2025 and prices to trade around our long-term price from 2026 with discounts for lower quality coals widening.”

For the iron ore producers, along with met coal a key material in steel making, UBS has a neutral rating on  Rio Tinto and BHP even with free cash flow yields at 10% and 8%  respectively.