Producers, caught on a treadmill of tonnage hikes to compensate for falling prices, face an even worse outlook with reductions of up to $10 a tonne for coking coal exports, or about 20 per cent on the existing benchmark price of $51 a tonne.

Steaming coal producers face price cuts of up to $8 a tonne, or about 23 per cent on the $34.50 a tonne benchmark, the Coal Forecast '99 conference here was told on Monday.

"Current signs of slowing world economic growth spell bad news for an early Asian economic recovery. The downside risks are growing and coal demand could easily stagnate or fall again in 1999," Macquarie Bank commodities analyst Jim Lennon said.

Less than one month ago, industry observers were forecasting price cuts of 10 per cent for steelmaking coking coal and 15 per cent forpower-generating steaming coal. The latest downgrade in the 1998/99 outlook comes less than one month before producers and buyers meet in the opening event of the negotiating season, the Australia-Japan Coal Conference in Tokyo.

The conference is the first shot in negotiations for Australian coal exports to Japan for its April/March fiscal year, which then act as the benchmark for Asia-wide and worldwide traded coal.

John Maitland, National secretary of Australia's militant coal mining Union the Construction, Forestry Mining and Energy Union, said the industry faces a shrinking number of producers turning out huge volumes at negligible prices.

This will contribute to the "inarticulate rage" of ordinary Australians, as demonstrated by the recent rise of Pauline Hanson's populist One Nation Party, over economic and industry restructuring which seems to involve "all pain and no gain", he said.

The Broken Hill Pty Co Ltd is the nation's biggest coal producer with massive coking coal mines in Queensland'sBowen Basin. Anglo-Australian miner Rio Tinto also has significant coal assets in Queensland and New South Wales with some of its mines in the Hunter Valley North of Sydney last year hit by costly strike action.

Lennon, who is based in Macquarie's London office, said Australian producers appear to have successfully pursued strategies of taking market share from other suppliers and exporting further afield than Asia.

"During the first half of 1998 Australian suppliers have managed to increase market share in the main Asian markets through intense price competition," Lennon said.

Exports to Japan, Taiwan and Korea are up by seven per cent on a year-on-year basis with the biggest gain achieved in the Korean steaming coal market.

"Korean coal imports from Australia in January to June rose a remarkable 31 per cent year-on-year to 13.2 million tonnes," he said.

There is a growing feeling that spot prices may have bottomed. Some relief has been achieved by higher Australian exports to Europe and in recentfalls in Port stocks.

"However, as growth starts to slow in Europe and North America, we believe that against a background of still-weak Asian demand, competition for market share could soon re-intensify," Lennon said.

Asian imported coking coal demand is expected to fall by 4.2 per cent in 1998 to 98.2 million tonnes, with the second half of the year weaker than the first, he said.

"We do not forsee any early recovery in 1999," he said.

Slowing world demand for steel and the threat of anti-dumping actions against Asian exporters is likely to lead to weaker integrated steel output in 1999 and a further small fall in coking coal demand, by 1.4 per cent to 96.8 million tonnes.

Crude steel and pig iron production in Japan in the current calendar year is likely to fall below 95 million tonnes, the lowest level in 25 years, with a 10-15 per cent fall in domestic demand offset by higher exports.