Goldman Sachs Group Inc. is making a case for "peak coal" in a research note Sept. 22, offering that global thermal coal production and demand reached a high water mark in 2013 and will only decline in the future.

"Peak coal is coming sooner than expected," Goldman said. "The industry does not require new investment given the ability of existing assets to satisfy flat demand, so prices will remain under pressure as the deflationary cycle continues.

"We also reset our long-term forecast to $50/[tonne], down 23% from $65/[tonne], to reflect what we see as the remote likelihood that the market will tighten ever again," it said.

According to its latest model, Goldman predicts worldwide demand for thermal coal used in power production will decline from a high of 6.15 billion tonnes in 2013 to 5.98 billion tonnes at the end of its forecast range in 2019. Total global production is also expected to peak in 2013 at 6.20 billion tonnes and decline to 5.99 billion tonnes in 2019.

Goldman set its forecast for Australian thermal coal f.o.b. Newcastle at $54 per tonne for 2016, which marks a slight improvement from current spot pricing. But it expects a fall to $52 per tonne for 2017, and $51 per tonne for 2018.

"In addition to regulatory headwinds that undermine in some markets the economics of coal-fired power generation in favor of cleaner fuels, the demand outlook is also challenged by additional risks," Goldman said.

"First, the coming surge in LNG supply will increase competition in the seaborne market for power generation fuels, particularly in Europe. More importantly, we believe current trends in China and India – accounting in aggregate for 66% of global consumption and 31% of seaborne imports – have emerged as the main downside risks to the thermal coal outlook."

Both China and India have been reducing their demand for coal imports as they ramp up domestic supply. Moreover new environmental policies in China are crimping demand there, hurting seaborne coal producers.

"We believe the seaborne market has gone ex-growth and coal prices will trade near the level of marginal production costs for the foreseeable future," Goldman said. It said increased mining efficiency and productivity is likely sustainable and will further pressure coal pricing, but that the decline in marginal costs has been faster than expected due to the recent decline in commodity currencies in Australia, Russia and elsewhere.

Extremely weak commodities markets have sent several U.S. coal producers into bankruptcy this year and others are struggling to restructure heavy debt loads to avoid the same fate.