Coal futures dropped to 9-year lows this week after a short-lived rally earlier in the year, forcing many miners to produce at a loss. Following a 10-percent rally in January and February towards $65 a tonne, API2 2015 coal futures fell below $58 a tonne for the first time since January 2006 in their last settlement. Markets are now almost 60 percent below their last peak in 2011, when they were buoyed by nuclear reactor meltdowns in Japan and floods in Australia. Physical prices are also down, with a cargo for prompt delivery from Australia’s Newcastle terminal costing around $67.50 a tonne, half its 2011 value. Analysts said the low prices were forcing many miners, especially in the United States, to operate at a loss. Energy consultancy Wood Mackenzie said that over 70 percent of U.S. Central Appalachian mines were now unprofitable, and that some capacity may have to be idled. “Close to 17 percent of forecast 2015 U.S. coal production is at risk of idling or closure, totalling 162 million short tons (147 million tonnes), as these mine’s total cash costs plus sustaining capital expenditures exceed current market pricing,” it said in a note. While some mines could be idled, fewer full closures are expected. “The reason for this is the amount of thermal coal sold on the open market is very small compared to that sold under contract. Contracts can cover multiple years, and prices may have been agreed well before the current market’s lows,” Wood Mackenzie said. Labour laws also make it difficult to close mines at short notice. Some miners have invested in becoming more competitive. “Colombian miners already benefit from low labour costs and they have invested in new technology, making them more cost competitive and able to live with lower prices than many competitors, especially in the U.S.,” said a coal trader. The South American country expects to produce 97.8 million tonnes of coal this year, up 10 percent from 2014. Australian mines are also well placed, analysts said. “Modest productivity gains, the rapid fall in oil prices and currency devaluation in Australia and Russia will help lower costs. Therefore, Australian mines stand in a relatively strong position compared with higher cost suppliers - particularly those in the U.S.,” Wood Mackenzie said in a separate note.