Met Coal Prices Spike as Queensland Floods Hit Supply - Stanmore Resources (ASX: SMR) in the Spotlight

Cyclone Koji has thrown Queensland's coal heartland into chaos. Weeks of heavy rain and flooding across the Bowen Basin have forced several major metallurgical coal producers to declare force majeure on deliveries. The supply squeeze has pushed coking coal prices up 14% in just one month to around US$246 per tonne - at levels not seen in many months.

For investors watching ASX metallurgical coal stocks, these weather disruptions highlight both opportunity and risk in Australia's dominant role in global steel supply chains.

Queensland's Outsized Role in Global Steel Production

Australia supplies roughly half of the world's seaborne metallurgical coal, and nearly all of it flows through Queensland's Bowen Basin. This concentration creates vulnerability whenever extreme weather strikes, as it did when Cyclone Koji made landfall near Bowen on 11 January 2026.

According to Bloomberg, companies including Stanmore Resources (ASX: SMR), Pembroke Resources, and Fitzroy Coal Sales have declared force majeure. At Dalrymple Bay Coal Terminal, more than 40 vessels are reportedly waiting for cargo that cannot reach the port.

The World Steel Association's October 2025 outlook projected global steel demand would stabilise at 1.75 billion tonnes in 2025 before rebounding 1.3% in 2026. India remains the key growth driver, with steel consumption forecast to rise 9% over two years, supporting ongoing demand for imported coking coal.

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Why Met Coal Prices Remain Sensitive to Disruption

Unlike thermal coal, which faces structural decline due to renewable energy expansion, Australian coal miners producing metallurgical coal benefit from a more resilient demand profile. Steel production still overwhelmingly relies on blast furnace technology, which requires coking coal as fuel and reducing agent.

The International Energy Agency's mid-2025 outlook noted that metallurgical coal has stronger prospects than thermal coal due to India's reliance on imports. India aims to nearly double its steel capacity to 300 million tonnes by 2030.

Commonwealth Bank research has noted that modest disruptions can push coking coal prices to US$250-300 per tonne, while severe events have seen prices exceed US$300.

Stanmore Resources: Record Output Meets Supply Squeeze

Stanmore Resources (ASX: SMR) has emerged as a standout performer on the ASX in early 2026, with shares rallying approximately 29% year-to-date to hit A$3.07, a new high. The company reported record quarterly production in October 2025, with run-of-mine output reaching 5.3 million tonnes and saleable production climbing 14% to 3.6 million tonnes.

Stanmore has strengthened its balance sheet, reducing net debt from US$99 million to US$90 million while maintaining liquidity of US$420 million. Despite a 60% profit drop due to lower coal prices earlier in the year, the company announced a final dividend of 6.7 US cents per share, exceeding analyst expectations.

Ord Minnett maintained a 'Buy' rating in December 2025 with a price target of A$2.72, while broader analyst consensus shows Strong Buy ratings with targets reaching A$3.56.

Key Risks to Consider

While near-term conditions look supportive for the met coal price outlook, investors should weigh several factors. Commodity price volatility remains the dominant risk, as prices can reverse quickly when supply normalises. Stanmore's Queensland concentration also exposes it to repeated weather disruptions and the state's elevated royalty regime, 20% for coal priced above A$175 per tonne and 40% above A$300.

Profit margins are highly sensitive to realised coal prices, and dividend sustainability depends on maintaining healthy cash flows through the commodity cycle.

Investor Takeaway

The Queensland floods have created short-term tightness in metallurgical coal markets at a time when Asian steel demand remains firm. For ASX dividend stocks in the resources sector, companies with strong production profiles and balance sheets are better positioned to weather volatility while capturing price upside.

Whether the current rally extends will depend on how quickly Queensland's infrastructure recovers, and whether La Niña brings further disruption through the wet season.

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For comprehensive coverage of ASX commodity producers, including cost analysis and production profiles, explore ASR's Resources Portfolio.

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