In metallurgical coal it is forecasting an "enormous requirement" for new projects by the end of the decade resulting in a spike in prices above $US140 to revive investment in new projects, which has stalled.
"It's a pretty bright light, but unfortunately it's a pretty long tunnel," Wood Mackenzie senior coal analyst Robin Griffin said. "But we think there are rewards for those that are able to withstand the downturn."
The unexpectedly slow rate of closures of loss-making mines in China means the market for thermal coal may not get back into balance until 2022, leaving seven years before prices recover to about $US80 a tonne, on Wood Mackenzie's forecasts.
For metallurgical coal, used in steel production, the consultancy's outlook is only slightly less bleak, with supply and demand returning to balance in about 2020.
IHS's price forecasts are more positive, predicting thermal prices will recovery to just under $US110 a tonne by about 2020 and metallurgical coal would recover to just short of $US200 a tonne.
"We think that this year will market the bottom of the cycle: I am hoping so because we simply cannot continue as we are," IHS senior manager Marian Hookham said.
Still, demand forecasts still point to a major opportunity for coal longer term, with energy demand expected to more than double across Asia over the next 15 years.
"Even with quite substantial assumptions around renewables growth, nuclear, hydro, gas … there is a place for coal and coal will grow substantially too, more than doubling in terms of its demand to the power sector," Mr Griffin said.
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