China is unlikely to speed up coal exports significantly to fill a gap created by weather-related port disruptions in Australia, with domestic prices still above Asian benchmark prices that are at three-year highs.

Industry officials and analysts said mines in the north, such as China’s top producer and exporter Shenhua Energy Co. Ltd. , were not keen on exporting unless buyers paid more than the 2007 term price of $67.90 a tonne set with Japanese buyers last month.

The mines further south, such as Yanzhou Coal Mining Co. Ltd. , which rejected joining the deal between Japanese buyers and the northern mines, were asking for $80 for term cargoes in talks that are expected to continue this week, they added.

“The domestic market is still more attractive, even at $70 a tonne,” Geoffrey Cheng, analyst at Daiwa Institute of Research (H.K.) Ltd., told Reuters.

Asian thermal coal prices, used for power generation, rose to $63.11 per tonne, the globalCOAL NEWC index showed on Monday, based on FOB prices at Newcastle, Australia, the world’s largest coal loading port which was hit by a storm about 10 days ago.

The prices, widely seen as the benchmark in Asia, had not risen that high since mid-June 2004, when they reached $63.38.

“China does not have many exports for spot cargoes. Most were done under long-term contracts,” said Huang Teng, general manager with CLT Consultancy Co. Ltd.

“Maybe they could offer one or two cargoes to take advantage of the high prices, but not many.”

YUAN, TAX REBATES

Industry officials and analysts said, however, that they would not be surprised if some Japanese utilities paid $80 FOB China, as there were virtually no other suppliers for additional cargoes, except for South Africa or Colombia.

“Some power generators do not seem to mind paying $80,” said one Japanese industry official based in Beijing. “Still, they are reluctant to see the figure in the long-term contract. They will be fine-tuning their position.”

Chinese miners and Japanese power generators were expected to meet in Beijing this week to settle 2007 term prices for mines from the south and pin down quantities to be shipped under the term contract, the industry officials said.

One industry source from the north said the northern export price of $67.90, up 28 percent from the 2006 term price, was “good enough to offset the end to tax rebates for exports and the yuan’s appreciation”.

“Spot prices for domestic seaborne business are already higher than the export price … And port fees for exports are twice as high as for domestic business,” the official added.

Chinese domestic coal prices are expected to climb further in the next few months after a turnaround last month, due to strong demand for power for air conditioners during the summer months. (Additional reporting by Niu Shuping in Beijing and Judy Hua in Hong Kong)