NAB’s forecast for thermal coal for the Japanese financial year, however, remains unchanged at $62/t.

The bank noted on Friday in its latest Minerals Energy Outlook that the spot price for hard coking coal had continued its gradual drift in recent months – trading at around $75/t for the active Asia Clear Australian contract, down from around $116/t at the start of the year.

Quarterly contract prices for Q4 were settled at $89/t, down from $93/t for the third quarter.

“Falling steel production in 2015 has driven weaker seaborne demand for metallurgical coal,” NAB said.

“This has been particularly noticeable in China, where imports totalled 39 million tonnes across the first ten months of the year, a decline of 21% year-on-year. The further fall in steel output in 2016 implies little prospect for a recovery in metallurgical coal imports.”

NAB also noted that China’s metallurgical coal imports have fallen more rapidly than pig iron production – which means domestic coal is providing an increasing share of China’s blast furnace requirements.

Over the first seven months of the year, NAB estimates that consumption of domestic coal fell by just 1.9% yoy.

“Producers have responded to weaker metallurgical coal prices with production cuts – most notably in the United States and Canada,” NAB said.

According to the US Energy Information Administration, total US coal exports – both thermal and metallurgical – fell by almost 22% yoy in the 10 months to October.

Similarly, Canadian metallurgical coal exports have fallen considerably in 2015, down by around 15% yoy over the first nine months.

In contrast, Australian exports of metallurgical coal have continued to increase, albeit the rate of growth has slowed across the year.

In the 10 months to October, Australian producers exported 155 million tonnes, a yoy increase of just 1%.

“Given declining steel output next year, there is little prospect for an acceleration in metallurgical coal exports,” NAB said.

“Weak market fundamentals are expected to keep contract prices subdued in the short term. We forecast hard coking coal contract prices to average $83.50/t in 2016, down from $93 in our previous outlook.”