UPDATE 2-China coal export quotas -- plentiful but too late

(Recasts, adds comments and details)

By Rujun Shen

SHANGHAI, Nov 4 (Reuters) - China has issued a larger-than-expected second batch of coal export quotas for 2008 to cut bulging stocks, but it has probably come too late to be entirely used up as world recession fears slow demand.

Analysts said China's efforts to boost coal exports at a time of ample local supplies and depressed global demand might only bear fruit if their exporters reduce prices, which are higher than international prices.

"The issuance is too late, and quotas are impossible to be fully utilised," said Wang Ye, an analyst at CITIC Securities Co.

The second batch of export quotas totalling 15.9 million tonnes is valid through the end of the year, bringing total coal export quotas for the full year to 47.7 million tonnes.

China issues export quotas in two batches each year. The second is normally granted in the middle of the year, but this has been delayed since the summer, as China grappled with severe power shortages caused by coal shortages ahead of the Olympics.

The government was probably feeling the heat from rising stockpiles and thus issued a bigger-than-expected second batch of quotas, analysts said.

"There is not enough time for us to sign contracts and export," said an official at one of the Chinese coal exporters.

As late as last month, some industry officials were expecting 5-10 million tonnes for the second batch, or nothing at all.

Domestic prices are hovering at their lowest levels since mid-June and most traders believe prices will fall further, but only mildly, underpinned by winter heating demand.

Domestic prices are higher than international prices, making it difficult for Chinese exporters to sell coal abroad.

"(Chinese) suppliers want to use up the export licences. They are keen to sell, but they will have to reduce prices," said a Beijing-based trader.

Spot coal with a calorific value of 5,800 kcal/kg was quoted at 880-900 yuan ($128.7-$131.6) per tonne, above the benchmark thermal coal price at Newcastle, Australia, of $100.83 per tonne.

EXPORTS MAY TICK UP

Analysts and traders estimated that China's total exports for the year would exceed 40 million tonnes, and exports in 2009 were likely to increase moderately if global economic conditions did not deteriorate significantly.