Uncertainty around the outlook for commodity prices has ramped up further in the wake of the recent Brexit decision.

In contrast, emerging signs of strength in Chinese construction and heavy industries is encouraging, although the long-term sustainability of the rebound is debatable.

“On balance, market fundamentals suggest that the recent rally in NAB’s commodity price index will prove short-lived, and a gradual decline will recommence going forward – albeit at a slower pace than in recent years,” NAB said.

“We argue that this rebound is unsustainable (given excess property supply in many locations) and prices should fall on weaker demand – although uncertainty around the duration of this current trend adds upside risk to our forecasts.

“Hard coking coal contract prices will average $US89 a tonne in H2 2016 and $84/t in 2017. Thermal coal prices are expected to decline in the next Japanese financial year (from April 2017) to $58/t.”