Surplus is expected to peak at 7% in 2017 before dropping 4% in 2018.

After the current period of decline, prices are expected to rise, hitting $US200 ($A213) per short ton in 2015 before settling at about $180 per ton by 2018.

However, the report stated: “It is worth noting that the iron ore and coking coal markets are highly concentrated and their global trade is dominated by a few major players that can swiftly reduce production to alter market balance and affect prices”

“Prices will also be affected by steel market demand, which is driven by the uncertain global economic environment.”

Australia’s Grosvener mine and other large-scale expansion projects are predicted to be the greatest drivers of supply growth.

The report also said supply from countries such as Mongolia and Mozambique was expected to increase dramatically, but the timing of the increases was still under question.

It’s no surprise that demand is expected to be driven predominantly by China.

The report said China would account for 25% of metallurgical coal imports in 2018.