“The commodities desk at Citi has been one of the first to call a bottom in coking coal prices, tipping a rebound in coming months, but with its long-term price expectation trimmed by $US10 to $US170 a tonne,”The Australian reported on Friday.

“Its short-term bullishness – $US143 a tonne in 2015 and $US152 a tonne in 2016 – is based on a pick-up in Chinese steel demand, announcements of the closure of 14 million tonnes of annual production since April, and a slowdown in new supply growth.”

Craig Parry, CEO of Russia-focused and Australia-listed Tigers Realm Coal, told The Australian that the coking coal price was set for a sustained recovery over the next two years as mines cut production.

“We estimate some 25 million tonnes of production cutbacks have been announced globally and there is potential for more cutbacks in China,” he said.

“With global steel production growing consistently at over 2.5% per annum, the demand is clearly there, and with these cutbacks in place there should be growing price tension in the foreseeable future.

“In addition, we are seeing renewed interest from major resource funds in the sector, which suggests a major turnaround in sentiment.”

However, a commodities report by Macquarie Private Wealth revealed that hard coking coal expectations had worsened of late and during December quarter contract negotiations.

“Just as with its peer iron ore, the current pressure to cut production in the Chinese steel sector (plus reduced buying in Japan and Europe) is impacting the spot metallurgical coal price,” MPW said on Friday.

“The latest Platts Premium HCC assessment has dropped below $US110/t FOB Australia for the first time since April 1.

“With Q4 contract negotiations underway, this does skew risk to the downside compared to the $120/t rollover expected by the market. However, the current spot price is only $2/t below levels when the last contract was agreed.”