By Michele Batchelor

May 24 (Bloomberg) -- Chinese coal exporters are demanding buyers in Japan and South Korea pay as much as 44 percent more for the fuel this year as output fails to keep pace with power station demand, six officials at the companies said.

Sellers led by China National Coal Group want to raise prices as much as $22.90 a metric ton to $75, excluding freight, said the officials, asking not to be identified because the negotiations aren'tcompleted. Japanese and Korean importers said $65 is their maximum offer. Talks yesterday entered a second round after deadlock in late March.

China, the world's largest coal consumer and producer, cut exports for a fourth month in April as domestic utilities build more power stations to drive the economy. Buyers in Japan and South Koreaprefer to buy Chinese coal, because shorter distances make it cheaper to ship than exports from Australia or Indonesia. Coal freight rates have risen to a record this year.

``For China, there's no incentive to export because selling domestically is more lucrative,'' said Donovan Huang, a Hong Kong-based analyst at Nomura Securities Co. ``It's tough for Japan. They willhave to come to some compromise.''

The average price at Qinhuangdao, China's biggest coal port, rose 27 percent in the first quarter to 485.08 yuan ($63.40). Japan paid $52.97 a ton under contracts that expired last month. South Korean buyers are paying $52.10 a ton for annual shipments ending in July, the officials said.

Japan imported 8.3 million tons of coal under the previous contract while Korea's contract is for 6 million tons. In 2004, Japan imported 94.9 million tons of coal and 62 percent of that came from Australia, 19 percent from China and 12 percent from Indonesia, according to the latest statistics from Japan Coal Development Co.'s Web site.

China National Coal Group, the nation's biggest coal exporter, has offered a price that's competitive compared with the cost of coal from Australia, said an official at the company. The company is representing suppliers, including China Shenhua Energy Co. and Datong Coal Industry Co., in the talks.

Japan Coal Development, negotiating on behalf of 10 companies including Electric Power Development Co., the country's largest power wholesaler, met with China National Coal yesterday and talks will continue today, the officials said.

Discussions with Korea South-East Power Co., a unit of Korea Electric Power Corp. that's representing five potential buyers, will be held on May 31 and June 1 in Seoul, said the officials. Korean power plants have started buying coal in the spot market to ensure future supplies in the event that the talks take longer than scheduled, officials said.

The Baltic Dry Index, a measure of shipping costs for coal and other commodities on different routes

and ship sizes, has risen 46 percent this year. At today's rates, the cost of shipping a ton of coal on the route from Australia to Japan in more the $20 a ton.

China, which became a net coal importer for the first time this year, has set its coal-export quota for this year at 80 million tons, unchanged from 2006, said Huang at Nomura.

The nation may export 55 million tons this year and 47 million tons in 2008, down from 63 million last year, Simon Francis, an analyst with Macquarie Bank Ltd., wrote in a research report March 14. China is cutting coal exports from as much as 94 million tons in 2004 to safeguard supplies for domestic power producers and steelmakers, he said.

Overseas sales of coal in April fell about 18 percent from a year earlier to 4.46 million metric tons, according to data posted May 15 on the Web site of Beijing-based Customs General Administration of China.

Domestic coal prices will rise in the second quarter as miners pass on a new government charge to customers, according to a report published by the National Development and Reform Commission's Price Monitoring Center posted on April 24.

Prices of coal for export from Australia's Newcastle port averaged $53 a ton in the first three months of this year, compared with $48.20 a ton a year ago.

Korea Midland Power Co. bought 240,000 tons from Indonesia, the world's biggest coal exporter, for loading between June 20 and Aug. 31 from Glencore International AG and LG Corp., said a trader involved in the transaction this month. Korea South-East Power Co. bought 780,000 tons for March 26 to July 5 delivery.

Korea East-West Power is seeking to buy 500,000 tons of thermal coal for delivery between June and September.