Chinese coal exporters want to hike prices 44%

Exporters are asking Korea and Japan to pay 44 percent more for coal from China this year, because the country’s domestic demand has grown, six officials said.
Sellers led by the China National Coal Group want to raise prices as much as $22.90 a metric ton to $75, excluding freight, said the officials of six companies, asking not to be identified because the negotiations aren’t complete.
Korean and Japanese importers said $65 is their maximum offer. Talks on Wednesday entered a second round after a deadlock in late March.
China, the world’s largest coal consumer and producer, cut exports for a fourth month in April as domestic utilities built more power stations to drive the economy.
Buyers in Korea and Japan prefer to buy Chinese coal, because shorter distances make it cheaper to ship than exports from Australia or Indonesia. Coal freight rates have risen to record levels this year.
“For China, there’s no incentive to export because selling domestically is more lucrative,” said Donovan Huang, a Hong Kong-based analyst at Nomura Securities Co.
The average price at Qinhuangdao, China’s biggest coal port, rose 27 percent in the first quarter to 485.08 yuan ($63.40). Korean buyers are paying $52.10 a ton for annual shipments ending in July, the officials said. Japan paid $52.97 a ton under contracts that expired last month. Japan imported 8.3 million tons of coal under the previous contract. Korea’s contract is for 6 million tons.
Discussions with Korea South-East Power Co., a unit of Korea Electric Power Corp. that’s representing five potential buyers, will be held next Thursday and Friday in Seoul, the officials said. Korean power plants have started to buy coal in the spot market to ensure future supplies in the event that the talks take longer than scheduled, officials said.
Meanwhile, Korea Midland Power Co. bought 240,000 tons from Indonesia, the world’s biggest coal exporter, for loading between June 20 and Aug. 31 from Glencore International AG and LG Corp., said a trader involved in the transaction this month.