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Thursday, 16 July 09
CHINA ISSUES SECOND BATCH OF '09 EXPORT QUOTAS


China has issued 25 million tonnes of coal export quotas for the second batch this year, the National Development and Reform Commission said Wednesday.

By now, the total export quotas for 2009 have reached 51 million tonnes, 7 percent higher than the 2008 quotas.

Last year's second batch of quotas was eagerly awaited as thermal coal prices more than doubled from the start of the year to a record high around $200, but the global economic slowdown has hit demand from Asian power utilities, while mine shutdowns have kept domestic prices above global levels.

Analysts say China is unlikely to use up the export quotas, given the current poor export situation. China's exports so far are far below the first batch.

China exported just 10.5 million tonnes of coal in the first five months of the year, while Chinese imports have jumped to record highs in recent months, pushing the Jan-May total to 32.2 million tonnes, according to customs data.

China, the world's largest coal producer and consumer, is on course to be a net coal importer for the first time in 20 years, as low prices in the international market and sluggish demand discourage exporters, analysts said.

"Even if coal miners have the ambition to export more in the second half of the year, it's difficult due to the low prices in the export market," said Huang Teng, a consultant at Beijing LT Consultants Ltd.

China only has four licensed coal exporters, all state-owned: Shenhua Group, China National Coal Group, Shanxi Coal Import & Export Group and China Minmetals Group.

Several analysts have forecast Chinese domestic coal prices, now hovering around $89 a tonne, could rise in the coming months on the back of summer demand and economic growth.

This is raising concerns among buyers that higher prices in the domestic market could prompt Chinese miners to renege on previously agreed export contracts, choking off supplies to some North Asian buyers.

China's power output rose on the year in June for the first time since last October, thanks to a pick-up in the economy and rising temperatures.

Supply has also been improving, as some of China's small coal mines are slowly returning to production, months after being shut down in strict safety inspections ordered by Beijing.

China's coal market is likely to be in balance, or perhaps show a small surplus, as a result, analysts said.

Source: sxcoal



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