JP Morgan has reduced its coal price forecasts for 2013 and 2014 because of greater supply being pushed into the market.
"The ramp-up of Australia's met coal shipments, as they recovered from flooding and industrial action last year, has led to a well-supplied market," the broker said.
JP Morgan estimates for the hard coking coal price to an average of $US156 per tonne in 2013 and $US160 per tonne in 2014.
For thermal coal, the forecasts have been cut to $US 88 per tonne from $US90 per tonne in 2013 and down to $US90 per tonne in 2014, down from $US95.
However, Australia's largest met coal producer, BHP, has a much-improved outlook as a result of its recent cost cuts and the tumbling Australian dollar, according to JP Morgan.
"We believe cash costs should trent to below $US110/t at full throughput, shifting the pressure onto North American supply."
The broker's revised target has come just as news emerged that Rio Tinto is weighing whether to partially or fully sell its Mozambique coal operations.