Excess supply and a shift to cleaner energy sources in some countries would likely see prices for the struggling commodity "remain at relatively low levels over the next couple of years", the RBA's Trent Saunders said in a June quarter update on thermal coal markets.

Thermal coal spot prices have  crashed by about 50 per cent since 2011, to languish at about $US60 a tonne. 

Australian coal producers have been among the most effective at reducing production costs, aided by the Australian dollar but "a significant share of seaborne thermal coal" in the country was likely being produced at a loss," Mr Saunders' analysis says.

"In Australia, the extent of any additional mine closures and the level of exports will depend on the ability of Australian producers to continue to reduce costs relative to international competitors. Nevertheless, the rate of cost reductions is likely to slow as the easiest measures are exhausted."

But the central bank was bullish on the medium-term demand prospects for the industry, particularly India and China. 

"The relatively low cost of coal-fired power generation, and its stability as a source of base-load power generation, is expected to support thermal coal demand over the medium term, particularly in China and India," the RBA note said. But Chinese demand would depend on the outlook in the energy-intensive manufacturing sectors.

This story first appeared in the Sydney Morning Herald