China's top five power generators are reportedly in talks with Australian coal producers to buy up to 1 million tons of the fuel at rates cheaper than the domestic spot market, according to a report by the China Securities Journal.

"Negotiations are underway to import coal from Australia," the report, quoting sources within China Datang Corp, one of the big five producers, said.

The coal, to be delivered at the South China port of Guangzhou, is likely to cost about 560 yuan per ton, including taxes and transportation fees, the journal reported.