Regional Coal: China to cut coal supply to South Korea's Kepco: Report

Korea Electric Power Co.(Kepco) said Friday that China Coal Import & Export Co. is likely to cut its term coal supply to Kepco this year on an expected surge in China's domestic demand, Dow Jones reported.

Kepco supplies about 95% of the coal for power generation in South Korea.

"It is already the end of April, (and) we have not received some of our term cargoes from China as scheduled," a Kepco official told Dow Jones Newswires.

As a result, Kepco is turning to Australia, from which it is already importing coal, for additional coal supply, he said, adding the company has just dispatched a trading team to Australia to secure more spot coal contracts for this year.

According to a term contract signed early this year, Kepco will import 2.2 million metric tons of coal from China in 2004, up from 2 million tons last year.

But the official said he doubts China Coal will provide the full volume under the term contract. Officials from China Coal could not be reached for comment.

China's coal demand has risen sharply since the middle of last year, in line with demand for coal-generated power amid the rapid expansion of the country's economy.

He said China Oil will also likely increase the export price for coal to be exported to Kepco this year to about $45/ton due to tight supply in China, up from about $30/ton last year.

He said the provisional export price proposed by China Coal for this year is $45/ton, but the price is not finalized. Kepco officials will soon visit China to further discuss the export price.

Kepco's annual coal import requirement averages around 15 million tons, with imports mostly from China, Australia, Indonesia and Russia.(*)