There are unlikely to be steep falls in prices of thermal coal this year as the supply of the commodity used in power generation and cement manufacturing draws close to a balance, Deutsche Bank said in a report.

"With the market near balanced in 2014, we expect that import demand growth in India, slower supply growth in Indonesia and strengthening economic conditions will limit the magnitude of any further price declines," the bank said in a January 14 report, Riding Waves of Supply.

Deutsche Bank also said that after several years of negative global economic growth shock, it expects an upside to 2014 world GDP growth.

"Of the major economies, we are most optimistic towards China and the US," the bank said, adding that "positive growth shocks in the rest of Asia as well as Europe are still possible this year."

"As global growth recovers, we see macro event risk dissipating. However, we expect commodity markets will still have to contend with rising supply and a stronger US dollar," Deutsche Bank said.

Market sources interviewed by Platts said they do not expect significant downward pressure on steam coal prices this year even though an oversupplied Indonesian and Australian thermal coal market is still expected.

A Singapore-based trader said thermal coal prices already bottomed out last year although prices will still be relatively low but not lower compared with 2013.

A north Asian utility source agreed that the oversupply situation this year will be "significantly less" compared with 2013.

One source has estimated that 2014 global seaborne coal supply will grow to 819 million mt from 797 million mt last year.

Xavier Jean, a Singapore-based director for Standard & Poors, also a unit of McGraw-Hill Financial, predicted last year that Australian and Indonesian thermal coal prices would mainly be rangebound this year.

A disciplined production could help prices recover heading into 2014 for both Australian and Indonesian miners, Jean said.