Chinese hungry for SA coal

London - Chinese utilities on the south west coast are still actively seeking South African and Colombian prompt coal cargoes despite ramping up imports during June, producers and traders said.

Falling freight rates to under $16 a tonne from South Africa's Richards Bay to Chinese ports have made South African coal a competitive import into China again, they said.

The tonnage, price and origin of coal imports into China has been one of the most closely-watched signals in the coal market this year because Chinese buying has been the overriding price support.

Any change to the pattern of Chinese imports can have a substantial effect on global coal prices, traders and utilities said.

The arbitrage window for South African coal into China has re-opened, as the latest Richards Bay export figures show: China took 720 000 tonnes from Richards Bay during June, up from zero in April and May .

"We're still in frequent and regular dialogue with the Chinese buyers, but most of the recent sales have been done by traders," one South African producer said.

"There's much more to be done into China even though the pace of buying has slowed recently and more cheap Indonesian has been going in," he added.

Producers including Anglo Coal, BHP Billiton and Xstrata have been moving coal from Richards Bay to China for most of 2010.

Traders have been the most active buyers of spot South African coal during the past few weeks, with a view to placing cargoes in China or India, utilities and producers said.

Both Chinese and Indian buyers have been seeking delivered prices of just above $100 a tonne, traders said.

China is the world's largest coal producer but cannot move enough coal quickly or cheaply enough from northern mines to southern coastal power plants to meet power demand.

When imports are cheaper than domestic Chinese delivered prices, end-users import heavily.

For latest Chinese coal prices click on .

China's imports could rise by over 70% in 2010 to 170 million tonnes due to power demand growth in the key coastal regions, the IEA and coal analysts said in May.

China's power generation hit a record high of 12.9 billion kWh on July 5, Xinhua quoted China's energy chief as saying on Thursday .

"We'd obviously be very happy if 700 000 tonnes a month went into China every month for the rest of the year but it's impossible to predict," another South African supplier said.

- Reuters