Moody’s Investors Service said that additional global supply of metallurgical coal will keep the price of the steelmaking raw material close to current low levels for the next few years.

Mr Anna Zubets Anderson, a Moody’s analyst in New York, said that most US production is unprofitable at current prices while as much as half of global output is making a loss.

The market was oversupplied by about 30 million metric tons at the end of the first quarter, despite global production cuts of more than 40 million tonnes in the past two years, Moody’s estimated today in a separate report.

Moody’s said that the international quarterly benchmark price for metallurgical coal, also called coking coal, is at a six year low of USD 120 per tonne. The current price is unsustainable and will recover to USD 135 to USD 145 by the end of 2015.

As many as a quarter of producers in Queensland, Australia, are operating at a loss, according to the report. Some of those unprofitable miners have been reluctant to scale back because of transportation contracts that require them to pay up even if there’s no coal to be moved.

US coking coal miners won’t be profitable as a group until the benchmark price reaches USD 160 to USD 170. They could supply over 50 million metric tons this year while burning more than USD 1 billion in cash.

North American suppliers have already started cutting back. Birmingham, Alabama based Walter Energy Inc began idling its British Columbia mines in April. US producers Cliffs Natural Resources Inc. and Alpha Natural Resources Inc. announced mine closings last month.