RPT-UPDATE 2-Yanzhou Coal hikes some prices to offset govt move

(Repeats story sent late on Wednesday with no changes to text)

(Adds price hikes for non-thermal coal, executive comments)

By Judy Hua

HONG KONG, June 4 (Reuters) - Yanzhou Coal Mining Co Ltd (1171.HK) (600188.SS), China's No. 3 coal producer, has raised some of its spot coal prices after being forced to supply extra coal to power generators at a discount, it said on Wednesday.

Yanzhou said the government of its home province of Shandong had introduced a temporary price cut for some thermal coal in the next three months, aimed at ensuring power supplies in the booming eastern province during the summer peak season.

In response, Yanzhou, which competes with bigger rivals Shenhua Energy Corp (1088.HK) (601088.SS) and China Coal (1898.HK) (601898.SS), raised its spot prices for customers outside the power generating sector, including steelmakers.

"Because of tight supply, we raised spot coal prices for other industries, such as coking coal (for steel), by 50-100 yuan ($7.21-$14.42) per tonne from last night," Board Secretary Zhang Baocai told reporters in a conference call.

Yanzhou supplies Shandong's power generators on a contractual basis, but the government has told the province's coal mines to supply an extra 2.56 million tonnes each month in July, August and September at a 10 yuan per tonne discount to the June price.

Yanzhou said it would account for around a fifth of the supply, meaning that the lower price would apply to about 1.5 million tonnes of its production, implying a total reduction in revenue of about 15 million yuan ($2.16 million), a small hit on Yanzhou's total revenues of 15.1 billion yuan last year.

"The impact from the government's price cut is tiny," Zhang said. "The price hike would more than offset an estimated 15 million yuan revenue reduction due to the price cut."

But Yanzhou's share price fell nearly 9 percent to HK$15.54 in Hong Kong on news of the price cut, while shares in Shandong-based Huadian Power (1071.HK), which stands to gain from the lower coal price, jumped 5 percent to HK$2.89 on Wednesday.

NATIONWIDE?

Zhang said other provinces might follow suit.

"There will be power shortages in some provinces during the summer peak season. We can't rule out the possibility of the government intervening in prices in other provinces as well.

"But a major restriction on prices would be impossible because the coal price is basically market-oriented."

The spot thermal coal price is around 650 yuan ($93.7) per tonne, about 25 percent higher than the contract price, a company official said.

The State Electricity Regulatory Commission said last month that coal shortages forced 32 power stations to halt generation, and stocks in several parts of China, including Beijing, were not enough to guarantee a week of generation.

The government has set a minimum reserve level of seven days of coal supply after severe winter weather in January and February cut transport links and forced many plants to stop production when they ran out of fuel.

But coal prices have soared while state-set power prices have not been increased since June 2006, pushing many plants into the red and making them reluctant to stock up on coal.

The China Business News said thermal coal stockpiles in Shandong fell to between 3 million and 3.3 million tonnes in May from 5 million at the beginning of March.

Meanwhile, power usage in the province was expected to rise 15 percent year on year during the summer peak, it added. ($1=6.936 Yuan) (Reporting by Judy Hua; Editing by Will Waterman)