April 22 (Bloomberg) -- Coking coal imports by China, the world’s second-biggest buyer, may reach the second highest on record this year as domestic production can’t meet demand from steelmakers, Citigroup Inc. said.

Purchases may be 29 million metric tons, analyst Catherine Wang said at a conference in Shanghai today. Imports may exceed that level should domestic output fail to expand by 10 percent this year, she said.

Global supplies of coking coal will be crimped this year as Chinese imports near the 2009 record of 34.4 million tons, and demand from other nations picks up with the economic recovery, Teck Resources Ltd. said in March. Prices may reach $300 a ton in the second half, Citigroup said April 12.

Should Chinese production expand by 5 percent, there will be a coking coal shortage of 50 million tons, a deficit that mining companies globally may struggle to meet, Wang said today.

BHP Billiton Ltd., the largest exporter of the coal, this year won a 55 percent price increase from Japan’s JFE Holdings Inc., as the global economy picked up and Chinese purchases bolstered demand. Prices were settled at $200 a ton for the three months started April 1.

Chinese imports surged fivefold last year after the government closed smaller, unsafe mines.

Chinese miners are depleting coal resources quickly and the quality produced is declining, Citigroup’s Wang said.

Only 25 percent of coking coal resources in China is less than 400 meters (1,312 feet) below the ground, and half of that is in highly gaseous districts, making mining difficult, SouthGobi Energy Resources Ltd. said March 31. Chinese production is peaking or has peaked in Shandong, Henan and Anhui provinces, the three biggest producing provinces after Shanxi, SouthGobi President Alexander Molyneux said.

--Helen Yuan. Editors: Tan Hwee Ann, Jacob Lloyd-Smith.

To contact the reporter on this story: Helen Yuan in Shanghai at hyuan@bloomberg.net;

To contact the editor responsible for this story: Andrew Hobbs at ahobbs4@bloomberg.net

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