China tells coal exporters to cut back

(Repeating story first published Aug. 21)

By Rujun Shen

SHANGHAI, Aug 21 (Reuters) - China has asked its coal exporters to reduce exports, as it is in the grip of its worst power crisis since 2004, largely caused by a coal shortage and high prices.

The government is eager to keep more supply back for local generators, many of which have been unable or unwilling to buy expensive coal.

But the move, together with the export tax hike, is unlikely to greatly ease the coal and power shortages in China.

The government did not issue a written order, but made the request orally in a meeting held last week just before it hiked export taxes on coal, but the extent of the export reduction sought was not clear, traders said.

All China's coal exports go through four state-owned firms: China Coal Energy Co Ltd , China Shenhua Energy Co Ltd , Shanxi Coal Import & Export Group and Minmetals Corp.

"It was an oral order. I can't comment on the quantity," said an executive at one of the firms.

Traders said the order, together with the imposition of a 10 percent tax on coal exports, could see shipments down by two-thirds in September. China exported an average of 4.3 million tonnes of coal a month in the first seven months of the year.

"Coal exports in September will be greatly reduced," said a trader at a foreign firm who is based in Beijing.

China exported about 53 million tonnes of coal, or about 2 percent of its total coal output, in 2007, according to official data from the National Bureau of Statistics and the customs.

"The supply tightness will not be eased much, even if exports are reduced. Rather, the move shows the attitude of government," said Henry Liu, an analyst at Macquarie Bank in Shanghai.

Falling supplies from China, as well as other coal producing countries, have helped Asia's benchmark coal price surge more than twofold in the past twelve months.

Beijing has raised power tariffs twice in the past two months, in an effort to help power generators who have been squeezed by soaring costs of coal.