The bulk shipping sector cannot catch a break especially since 2016 is forecast to be another challenging year for China's coal sector, according to Fitch Ratings.

China is a crucial player in global trade, accounting for 20% of world coal imports, with iron ore and coal representing well over half of the seaborne dry bulk demand. With pessimistic predictions for demand from China, dry bulkers need yet again to brace for another tough year.

The country's coal sector is faced with a number of problems, including oversupply and weak coal prices and Fitch expects the oversupply conditions to prevail for some time, and financial woes to deepen this year.

Based on the 2015-full year results, out of the twenty eight of 33 coal companies listed on China's Shanghai and Shenzhen Stock Exchanges, 20 reported a net loss after excluding any one-off gains.

The nation's central government has endeavored to address the glut by encouraging the phase-out of high-cost and old mines, although implementation at the various government levels entails various other issues.

According to Fitch, price recovery is very unlikely in 2016 as consolidation of the excessive mining capacity will take longer – and require more effort – than the central government expected, coupled with with a weaker demand outlook.