Baoshan Iron & Steel has enough coking coal as China's miners hike prices

BEIJING (Reuters) - China's top listed steel maker Baoshan Iron & Steel Co., has enough coking coal in stock to last four weeks and will buy locally if needed, a source said on Friday, as some domestic miners hiked prices amid concerns about tightening supplies.

Steel mills in China and Japan have scrambled to find alternative supplies after a powerful cyclone ripped through the state of Queensland last week, damaging coal haulage and cutting off supplies in the world's top exporter.

"Our current stock level is relatively high and can last at least for a month," a purchasing manager for coke and coking coal said on Friday. He declined to be named as he is not authorised to speak to the press.

He said he would not consider alternative supplies from Russia or Mongolia, which are often considered of lower quality compared with Australian coal.

While the steelmaker, which veteran traders say is one of China's main importers of Australian coking coal, is unscathed, the cyclone may disrupt smaller mills.

Some buyers in China, the world's largest coking coal importer, have even looked to fix cargoes from the United States, spurring a 9-percent rally in Chinese futures.

Shanxi Hongsheng Energy, a Shanxi-based coal company with 3 million tonnes of annual capacity, plans to hike physical prices by 50-100 yuan ($14.50) per tonne, the second increase in the past week, a senior sales manager said.

He said the move comes as the Shanxi provincial government launched in mid-March a fresh crackdown on illegal mining, with frequent checks on sales documents and safety measures in the nation's top coking coal producing region.

The company hiked spot prices by 50 yuan ($7.25) on April 1, according to the sales manager who spoke on the condition of anonymity as he is not authorised to speak to the press.

China coking coal futures fell 3.8 percent to close at 1,283 yuan on as immediate concerns about tightness waned despite domestic supplies dwindling as Beijing seeks to cut excess as part of its long-term shift to cleaner fuels.

"Many of the coking coal producers in the region have been operating at their full allowed capacity. It leaves us no room to ramp up output even if we want," the sales manager said.

The press office of Baowu Steel, parent of the listed Baoshan Iron and Steel, was not immediately available to comment.

(Reporting by Meng Meng and Josephine Mason; editing by Susan Thomas)