Patriot Coal Corp announced Mar 15 it has reached agreement to sell metallurgical coal to Asia, the latest indicator of a surge of high-grade U.S. coal to the Far East.

The deal done through a third-party trading company, XCoal, involves 1.5 million tonnes of metallurgical coal for delivery from April into early 2011, Patriot said in a news release.

Buyers were not disclosed, but the news release said the ultimate destination would be "steel mills in the Pacific Rim." The coal will come from Patriot's Panther and Winchester mines, the release said.

"This transaction opens up new markets for our products," said Patriot Chief Executive Richard Whiting, predicting additional opportunities for Patriot to sell met coal to Asia.

"With this sale, we now expect our 2010 met coal shipments will be more than 7 million tonnes. This represents more than a 30% increase in total met shipments over 2009 levels," he said.

American met coal sales to Asia, a rarity in the past, have soared amid rapid economic growth in that part of the world and problems getting supply from Australia, said Jim Thompson, managing editor of industry newsletter Coal & Energy.

Consol Energy Inc confirmed last August it was selling coal to China, and Thompson said other U.S. companies are believed to have sold coal directly or through third parties into Asia.

The long-haul economics works because Asian buyers can get coal usable for steel-making at a U.S. mine for $80 to $85 a tonne, pay $40 more for rail transport to a U.S. port, Thompson said.

That adds up to as much as $125 a tonne or about $140 a tonne at a U.S. East Coast port, Thompson said.

Premium Australian metallurgical coal is selling to Asian steel mills for $200 to $250 a tonne, analysts said.

That leaves considerable room to pay shipping costs for U.S. coal from North America to Asia, making the deal worthwhile economically for both buyer and seller, Thompson said.