As previously reported, Morgan Stanley downgraded Warrior Met Coal to Equal Weight from Overweight and cut its price target to $17 from $27. Analyst Evan Kurtz has increased concerns about met coal following a recent trip to China saying he sees risks from higher international met coal supply, a low probability of reduced Chinese supply, and peak steel demand in China during 2017-18. Morgan Stanley's commodity team expects benchmark pricing to fall to 100/ton from the current $140/ton by 2019 and for a surplus to form after 2017 as China increases domestic supply and steel production rates slow.

Citi downgraded Arch Resources (ARCH) to Neutral from Buy with a price target of $170, down from $185. The stock is currently trading at an 11% free cash flow yield on $250 per ton hard coking coal, which represents fair value. The firm now sees equal upside and downside risks. Its preference for met coal exposure is Warrior Met Coal (HCC), which it notes is trading at a 17% yield post Blue Creek, which will start to be delivered in 2024.