The Chinese government has indicated it will reduce the import of Australian coal as the global market seeks to recover from the impact of the COVID-19 pandemic.

In its US annual report, BHP said export of metallurgical coal to China was one of the few areas to hold up during the pandemic.

"Metallurgical coal prices were under downward pressure for most of FY2020," it said.

"Broad-based demand weakness in all major import regions but China was a weight on the price.

"In the short term, metallurgical coal still has to navigate a difficult period as major importing regions manage their reopenings."

BHP said COVID-19 permitting, a sustained improvement was possible in the second half of FY2021.

"Over time, premium-quality coking coals are expected to be particularly advantaged given the drive by steelmakers to improve blast furnace productivity, partly to reduce emissions intensity," it said.

"We believe that a wholesale shift away from blast furnace steelmaking, which requires metallurgical coal, is still decades in the future given the high cost of conversion and operation associated with alternative steelmaking technologies."

Turning to thermal coal, BHP said tighter import controls at Chinese ports also contributed to lower prices.