US Coal "2Q26 Preview: Weak quarter vs the returns pivot" Eadie

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US Coal "2Q26 Preview: Weak quarter vs the returns pivot" Eadie

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US Coal Equities

Americas2Q26 Preview: Weak quarter vs the returns pivot

Mining

George Eadie

Market volatility pulling back stocks beyond fair value Analyst

We expect 2Q26 to be soft, driven by widening discounts to benchmarks and early signs george.eadie@ubs.com

of cost pressure. CNR remains our preferred exposure into earnings, supported by +1-646-996 4596

improving unit costs from operational improvements and current returns continuing, Myles Allsop

while HCC and BTU returns pivot are weighted to later quarters and dependent on Analyst

pricing/delivery. The key sector debates centers on margin pressure (pricing discounts + myles.allsop@ubs.com

costs) and the timing of FCF inflections driving buyback pivots from 2H26. See Figures +44-20-7568 1693

3-5 for q/q EBITDA bridges and Figures 6-8 for earnings preview. Daniel Major

Analyst

daniel.major@ubs.com

The pricing backdrop remains challenging for US realizations. Ample spot supply and

+44-20-7568 3472

weak Atlantic demand are forcing producers to discount cargoes and redirect volumes

into Asia, with a persistent buyer-seller gap constraining liquidity despite benchmarks Sharon Ding

holding (~$240/t PLV HCC & ~$160/t HVA). Met markets remain soft with Chinese Analyst

sharon.ding@ubs.com

buyers largely sidelined, reflecting weak steel demand, moderately elevated inventories,

+852-2971 6284

and expectations for slightly lower prices. While benchmarks have been relatively stable,

the market is characterized by oversupply, thin liquidity, and a wait-and-see dynamic, Lachlan Shaw

leaving direction dependent on China restocking, demand recovery, or exogenous Analyst

lachlan.shaw@ubs.com

catalysts.