While coal prices are now below sustainable long-run levels, Citi does not expect a return to prices levels seen a few years ago at the height of the resources boom.
Citi has cut its long-run thermal coal price forecast to $US80/tonne from $90 and its met coal price forecast to $125/t from $170.
The biggest threat of downside risk to its forecasts is China and India, because China could re-emerge as a net exporter of met coal.
Credit Suisse has issued a research report which states the coal industry has a “dire outlook” and has downgraded ratings for Arch Coal and Alpha Natural Resources.
