Daily Commodities Note: Fed Warsh to stick firmly to inflation target

Research evidence excerpt

Daily Commodities Note: Fed Warsh to stick firmly to inflation target

Key UBS Research

US Coal 2Q26 Preview: Weak quarter vs the returns pivot. We expect 2Q26 to be

soft, driven by widening discounts to benchmarks and early signs of cost pressure. CNR

remains our preferred exposure into earnings, supported by improving unit costs from

operational improvements and current returns continuing, while HCC and BTU returns

pivot are weighted to later quarters and dependent on pricing/delivery. The key sector

debates centers on margin pressure (pricing discounts + costs) and the timing of FCF

inflections driving buyback pivots from 2H26. See Figures 3-5 for q/q EBITDA bridges

and Figures 6-8 for earnings preview. Link to note. Source: UBS.

Indonesian Metals Sector - Nickel: regulator signals no nationwide RKAB

increase in H226. Talks today between the local mining regulator (the ESDM) and

Parliament may signal support for nickel prices based on our review of the minutes of

the meeting: 1) a continued focus by the ESDM to tighten nickel supply; and 2) no

nationwide increase in the nickel ore mining quota (RKAB). This is in line with our

positive view on nickel and one reason for our recent preference shift to nickel from gold

in Indonesian metals. The ESDM highlighted the procedure to gain RKAB approval,

including that a proposed RKAB increase must be linked to the applicant’s smelting/

refining capacity in Indonesia. While the window to submit a revised RKAB starts on 1

July through to 31 July 2026, the ESDM said proposals will be reviewed individually. Link

to note. Source: UBS.

Australian Resources - AI, Debasement & Divergence. Commodities & the miners

have traded with AI-sentiment over recent months as well as changing views on the