(Idea) Warrior Met Coal: One Of The Best Met Coal Names
By: Jon Costello
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(Public) Our #1 Metallurgical Coal Stock Pick - Warrior Met Coal
A year ago, I bought shares of Warrior Met Coal HCC 0.00%↑ because I believed its Blue Creek project would transform an already low-cost producer into a much larger free cash flow generator.
The company has now completed the roughly $1 billion project ahead of schedule, within budget, and without adding funded debt, while the first quarter provided the clearest evidence yet that Blue Creek is lowering Warrior’s companywide cost structure.
Since then, the shares surged to $110 and have since pulled back into the high-$70s as elevated freight costs and weak price realizations have obscured the improvement in the underlying business.
In this article, I review what has changed since my original investment thesis, estimate Warrior’s value across several coal price scenarios, and explain why I believe the shares have become attractive again.
Rising Coal Prices Failed to Sustain a Higher Stock Price
Metallurgical coal has gone from glutted to tight in six months. The premium low-vol benchmark out of Australia fell below $200 per metric ton in the second half of 2024, spent most of 2025 between $170 and $200, and now trades in the mid-$230s.
Two supply-related disruptions drove the move.
The first came from China. After a May 22 gas explosion at the Liushenyu mine in Shanxi province killed at least 82 people, regulators halted 109 mines representing roughly 122 million tons of annual capacity. Chinese coking-coal production fell by an estimated 288,000 tons per day. By June 5, suspensions had eased to 59 mines, but the initial loss of supply tightened the broader coking-coal complex and lifted the seaborne premium low-vol benchmark that influences Warrior’s Mine No. 7 pricing.
The second disruption came from transportation. Since late February, the Iran war has sharply reduced traffic through the Strait of Hormuz, pushing dry-bulk freight costs higher. This matters because Warrior pays freight on High Vol A coal sold into the Pacific Basin on a cost-and-freight basis. Higher benchmark prices have therefore been partly offset by freight costs, compressing margins and contributing to the stock’s weakness.