HONG KONG, Nov 27 (Reuters) China, the world's top coal producer, is offering additional spot cargoes for export, with Rio Tinto's force majeure in Australia pushing up spot prices of the fuel in Asia to record highs.
Industry officials and traders said on Tuesday that Japanese power generators were set to pay more than a tonne, free-on-board, for top quality coal from China to bridge a gap from Australia and Indonesia. South Koreans were expected to follow suit.
''Chinese thermal coal is about -. But it is acceptable by Japanese power utilities because they are really short of thermal coal right now,'' said a trader based in Beijing.
''In Australia, the prices are high ... and there are no additional cargoes for export. They have to come to China.'' Rio Tinto Ltd/Plc on Monday declared force majeure for coking and thermal coal because of smaller shipment allocations caused by port congestion, helping push up the benchmark prices to a record above 0.
''Export prices have become attractive for miners again,'' said a source at one of China's top coal mines. ''Export volume is increasing. China has became a net exporter again. For the full year, maybe it will be the same.'' Official data showed that China has become a net exporter in October, with higher international prices encouraging more exports to South Korea, Japan and Taiwan, while choking imports to southern China, particularly from Indonesia.
CHINA TALKS, SHANXI The traders and industry officials said a pickup in exports helped raise Chinese spot domestic prices to new records, supporting the miners' push for a price hike of up to 100 yuan (.5) a tonne in the 2008 term contracts with power generators.
The top quality steam coal was quoted at 530-540 yuan in the key Qinhuangdao port since domestic supply was tight, in part due to new fees in Shanxi, China's top coal producing province, and Beijing's clamp-down on illegal mines there, they said.
In October, Shanxi began collecting 15-20 yuan a tonne for environmental concerns and miners' rehabilitation, on top of the sustainable development fund that was introduced in May.
''We have kicked off next year's price negotiations ... Things are good for the sell-side,'' said the source at a mine. ''The miners think other provinces will introduce a similar policy. We want a price increase offsetting this kind of additional cost.'' The officials and traders said the government was also closing down small, illegal mines and stopping coal from illegal mines from entering the market in Shanxi, in its latest attempt to improve China's mine safety record.
Asked about the domestic price talks, another source at another major mine in China said: ''I have heard some people talking about a 10-20 percent increase.'' REUTERS SLD DS1138