China's thermal coal prices were stuck at below $US120 a tonne for the fourth consecutive week, encouraging Chinese miners and traders to sell their supplies overseas to cash in on soaring international prices.
Coal with a heating value of 5,500 kcal/kg stood at 780-790 yuan ($US118-$US119.68) on Thursday, its lowest since November 1, while inventories at top coal port Qinhuangdao dipped 1.3 per cent to 6.95 million tonnes from a week ago, data from industry website sxcoal.com showed.
With devastating floods in Australia's Queensland state causing a regional supply crunch, benchmark Asian coal prices on globalCOAL's Newcastle index have jumped 18 per cent from a month ago to trade near $US140 a tonne C at least $US15 a tonne higher than prices in China.
The hefty price arbitrage has lured China's top miners, including Shenhua Group and China National Coal Group, back to the overseas spot market after a long period of absence.
Industry sources said Chinese producers were offering prompt-loading shipments to Japan and Taiwan at close to $US150 a tonne free-on-board, based on coal with a heating value of 6,700 kcal/kg gross air dried.
"They have been very active but they are also careful not to flood the market and push down prices," said a Beijing-based trader.
"Even Chinese traders are looking at ways to re-sell the coal they had bought at lower prices. Everyone is trying to make a quick buck from the flood," said the trader.
Utility sources in North Asia said that they have received offers from China, with some saying that they are in talks, but didn't give price details.
Traders said some Japanese utilities are urgently seeking prompt supplies and even power plants that had recently bought some spot supplies would see their inventories last until end-February at the latest.
Coal freight lines could start reopening as early as Thursday in Australia's flooded Queensland coalfields as waters recede, rail officials said, prompting predictions of a faster-than-expected start to a recovery in exports.
China to fill supply gap
With Indonesian suppliers largely sold out until March and Russia as well as South Africa facing their share of weather-related problems, Chinese miners have seized the opportunity to grab a share of the spot business.
Shenhua Group and China National Coal, the country's top two miners, have a combined annual output of at least 300 million tonnes, which industry sources say means China has ample supplies to help plug the gap caused by Australia's floods.
However, Chinese miners will only be interested in exporting premium bituminous coal that fetches higher prices, as their exports are subject to a 10 percent tax.
Shenhua last week sold a February-delivery thermal coal shipment to a South Korean buyer at $US142 per tonne on a FOB basis for coal with a heating value of 5,800 kcal/kg net as received.
Traders based outside China said import demand from the country has been almost non-existent as the recent rally in international coal prices means it was much more economical for buyers to seek domestic supplies.
