Prices of coal used for making steel has been forecast to further slide and could hit rock bottom to its lowest price in two years, as global steel output slows down spurred by the deepening debt crisis in the Eurozone.

Moreover, the coal price cuts could further hurt whatever potential earnings coking coal suppliers BHP Billiton Ltd. and Rio Tinto Group, among others, may have expected for the remainder of the year.

According to a Bloomberg survey participated in by seven analysts and industry officials, the contract prices of metallurgical coal could fall to as much as $200 a metric tonne in the three months to Dec. 31, an 11 per cent reduction, from $225 a metric tonne this quarter.

"Steel demand in Europe is very weak and consumption has slowed dramatically in recent months," analyst Tim Cahill said in Bloomberg News. "It'll get worse in the second half as government spending slows and banks stop lending to home buyers."

"Unless the U.S., Europe, China pump in serious stimulus, global steel demand will remain subdued."

The slowing steel demand had forced ArcelorMittal, the world's largest steelmaker, to close or suspend its plants as the worsening eurozone fiscal problem tugged down not only demand but also prices of world commodities. The slowing economic growth of China, the world's biggest steel producer and consumer, likewise added to the dilemma.

Should China's receding demand further push benchmark prices to drop below $200 a metric tonne, coking coal suppliers will most likely slash output just so to maintain prices, analyst Kuni Chen said.

Some 20 analysts surveyed by Bloomberg estimate that BHP Billiton Ltd.'s full-year profit could fall 24 per cent to $17.9 billion.

The global miners' full-year earnings could likewise be hampered by China's supply contract transfer from Australia to Mongolia. China stands to save more sourcing coal from Mongolia as the latter is located right next to the second-largest economy. The size and quality of its reserves are also comparable to Australia's.

"China benefits from its proximity and availability of cheaper coal from Mongolia," analyst Helen Lau. "Mongolia will continue to replace Australian coking coal in China."