JOHANNESBURG (miningweekly.com) – A greater-than-expected decline in global mine production, predominately in China, has prompted Fitch group company BMI Research to forecast higher coal prices.

The research group now calculates that Newcastle coal will average $53/t this year, up on its previous forecast of $51/t.

It has also lifted its 2017 forecast to $57/t, from $52/t previously, and expects coal prices to continue forming a base over 2016.

This means that the average Newcastle coal price of $51/t for the year thus far becomes $55/t for the remainder of the year.

The June 22 price was $56.1/t.

The research organisation says the temporary boost to Chinese import demand from the stimulus-led rise in economic activity will fade in the second half of this year and prevent a more substantial rebound in prices than has already been seen since the February low of $47.6/t.

It also forecasts that a second consecutive yearly decline of global coal output will rebalance the seaborne market after several years of surplus.

It foresees global coal production falling 4.1% this year, on top of last year’s 4.3% fall, and coal consumption falling 2.1%, which will help to erode current oversupply and relieve the downward pressure on prices.

“Our supply and demand forecasts imply only slight market deficits from 2017 to 2020, an assumption that underpins our forecast for very modest price rises over the coming years,” the research house added.