Stanmore Coal believes the market is unnecessarily bearish on junior coal sector as Chinese demand for high-grade thermal coal remains high.

Stanmore Coal Ltd says the junior coal sector is oversold and that long-term fundamentals for coal remain strong.

In a statement to the market today, the Bowen Basin and Surat regions coal miner says there is gas to coal switching.

"Thermal demand in North America is expected to increase as gas prices rise, resulting in reduced exports to Asia," Stanmore said.

China’s increasing concern about its own pollution levels mean demand for low-impurity thermal coal from the Surat region will be strong, the Stanmore said.

The company also said there is a coking coal shortage.

"High-quality, low-cost, metalurgical coal projects remain scarce and valuable."

At 1436 AEDT the company’s shares were unchanged at 19 cents against a benchmark index fall of 0.99 per cent.

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