Even though Newcastle spot prices are only slightly down to the $98.50 range as of Friday, last week Macquarie analysts saw signs that the cold snap driving the extra Chinese demand was starting to wane.

“While inventories at power stations remain low at nine days of consumption, the situation is getting better, with some improvement in stocks in the heavily affected central provinces,” Macquarie said in a commodities report.

Some slippage in Newcastle prices could be on the horizon as Macquarie noted the

China-delivered price from Qinhuangdao port and the Newcastle-delivered price into China had equalised, “reducing the import arbitrage incentive from Australia”

Macquarie said Chinese thermal coal imports were remarkably strong in December. The bank estimated the country shipped in 12.1 million tonnes for the month and that global thermal coal exports increased 32.5% in the December quarter compared to the previous quarter.

“While it has been clear for some time that China would be a net importer of coal in 2009, the size of net imports continues to exceed prior expectations,” Macquarie said.

“The increase in Chinese net imports more than offset the weakness seen in demand elsewhere in the world. The exception has been India, which has complemented the rise in China.”

But thermal coal producers catering to the Europe’s ARA ports are not enjoying the same levels of trade.

“The strength of imports into China and India are in stark contrast to the situation in Europe,” Macquarie said.

“It doesn’t appear that the cold snap has done much to reduce stocks at power plants towards more normal levels, with ARA port stock remaining near record highs at the end of December.”

ARA spot prices were $16 per tonne lower than Newcastle prices as of Friday.