The long-term outlook for European thermal coal market pricing remains constrained due to both structural and cyclical factors, analysts at Standard Bank said in a quarterly research note.

Standard Bank said coal supplies to Europe will increase in the second quarter of 2014 as US miner Drummond ramps up its 60 million mt/year direct loading facilities towards 30 million mt/year of mine capacity.

"Other Colombian suppliers are also increasing shipment rates, leading to an improving 6-10 million ton run-rate from Colombian miners across Q2," the research note said.

The investment bank said that by mid-May, summer heat forecasting may see a lift in European demand, as utilities plan for increased electricity usage rates.

"However, underlying anemic industrial growth and ongoing renewable expansions continue to carve into coal's market share despite further planned domestic coal mine closures, putting a lid on pricing upside," Standard Bank said.

The bank also cited the EU's intervention to remove 900 million excess 2014-2016 allowances from the European Emissions Trading System until 2019/2020 as the cause of firming carbon credit prices "in a bid to improve low-carbon technology investments," thus lowering coal's arbitrage future.

The bank added that it failed to envisage any significant price rallies, apart from those caused by so-called "Black Swan" events such as strikes or geopolitical upheaval or unplanned seasonal squeezes.

"We continue to see coal trading between $75-85/t, with Russian and US materials waiting in the wings above these levels," the report concluded, adding that there is "an ever-diminishing logic" for South African FOB Richards Bay coal to be shipped north into the Atlantic market.

Platts CIF ARA 15-60 day spot prices averaged $78.85/mt in Q1 2014, down from $84.97/mt in the previous quarter.