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Australian Coal Report

ISSUE 0471 7 November 2012 www.coalportal.com

Thermal coal prices and demand in doldrums

By Angie Kay Ships queuing off the Port of Newcastle for thermal coal exports number just six, four less than the previous week, pointing to ongoing softness in thermal coal demand. The subdued demand is mirrored in spot prices which this week moved back up to $80/t on trading platform globalCOAL after dropping to $79.25 last week. While not quite indicative of a rebound in coal prices, it does offer some minor relief for producers who have watched prices steadily fall since August 2010. The last time Energy Publishings NEX index (ex-Newcastle FOB) dropped below $80 was in November 2009. The $79.25 trades happened in quick succession on November 2 and were for December delivery. The trades indicate prices for near-term deliveries remain weak. However, there are plenty in the industry looking ahead at the forward curves which are in contango and suggest a strong price rally in early 2013. globalCOAL is The Chinese are reporting physical curve prices of $84 for January, $86 for taking some February, $86.45 for Q1 and cargoes but it is on a bounding to $90.60 for Q2. Sources say this may point to cargo by cargo basis. sentiment ahead of the start of - Singapore-based trader the Japanese fiscal year rather than any perception of a supply shortage. By the first calendar quarter of 2013, thermal coal contract negotiations will be underway with sources telling Australian Coal Report the new contract will have to be above $80 to keep enough Australian coal in the market to satisfy Asian demand. Despite this, these forward numbers belie current market sentiment. I would suggest the forward curves are nothing more than wishful thinking, one Singapore-based trader told Energy Publishing. The people we sell to are reluctant to pay at the prices appearing on trading screens and indexes because they feel there is still room for prices to fall. When you talk to them about forward curve prices, they laugh and shake their heads. They wont even entertain locking in cargoes at those prices. There would need to be a very significant supply disruption to push prices upwards and there is nothing substantial enough on the cards to make most people think this is about to happen. The consequence, the trader said, is a growing reluctance by endusers to enter quarterly deals with the preference more and more being for spot cargoes, most particularly Chinese and Indian buyers. The Chinese are taking some cargoes but it is on a cargo by cargo basis, he said. A Panamax here and a Panamax there. No-one wants to commit to future cargoes now because there is still a belief among buyers that prices have further to fall. A recent spike in spot tenders by Korean and Taiwanese gencos indicates there is still some buying interest though sources say this is more about the fact that prices are low enough to entice in buyers who think the price is near bottom.

BRIEFS
Mixed result for coal exports
The volume of Australias coal exports rose 3% in the September quarter compared with the previous quarter, however a 9% drop in unit prices meant the value of the nations coal exports came in $656M (6%) lower overall. In seasonally adjusted terms, Australias balance of trade was a deficit of $1.456B during September, a fall of $420M (22%) on the deficit recorded in August this year. The price of hard coking coal slipped by 1% between August and September although the quantity exported jumped by 14%, the same increase recorded between July and August. Semi-soft prices were down by 3% between August and September while the quantity shipped rose by 10%. The price of thermal coal continued to trend downwards, 2% during September, while the volume exported was up 12%.

No respite until next year: Whitehaven

Whitehaven Coal board chairman Mark Vaile believes there is no real sign of a coal market rebound in the immediate future, although some form of price recovery may occur in early 2013 on the back of renewed demand growth from China. The benchmark price of Whitehavens metallurgical product, Newcastle semi-soft coking coal (SSCC), has fallen from around US$140/t FOB in the September quarter to around $115/t in the December quarter, with further discounts being sought by buyers in secondary markets, he reported. Similarly, the monthly index of standard Newcastle thermal coal has fallen from over $US90/t in July to less than $80/t in October. During the companys annual general meeting last week, MD Tony Haggarty highlighted the compelling economics of the new Maules Creek development describing it as one of the best global coal projects. The competitive capital development costs, low stripping ratio, the high yield (80-90%) of excellent quality SSCC and/or thermal coals together with a very competitive cost structure against global competitors make it world-class, he explained. Haggarty puts the C1 cash cost (including mining, preparation, transport, port and overhead costs, but excluding royalties and levies) of production at Maules Creek at just over US$60/t while Narrabri, Vickery, Tarrawonga and Werris Creek hover in the $65/t to $75/t range. Meanwhile, Whitehavens largest shareholder Nathan Tinklers attempt to dethrone the board and assume the role of chairman at last weeks AGM failed.

Australian Coal Report

BRIEFS CONTINUED
GVK/Hancock shed staff
Galilee Basin aspirants GVK Resources and partner Hancock Coal have laid off about 70 staff from its 180-strong workforce based in Brisbane, local media reports. GVK/Hancock are planning a US$12B mega mine, rail line and port facility in the greenfield Galilee Basin in Central Queensland, capable of yielding some 35Mtpa of export thermal coal. The joint venture continues to have its detractors as a result of falling thermal coal prices, with some analysts questioning the viability of projects in the untapped Galilee and Surat Basins in Queensland. Despite this and the layoffs, GVK/Hancock remains steadfast in its bid to ship first coal in 2016 from the project. Meanwhile, New South Wales miner Yancoal is shutting down its operations over the Christmas period to save on costs according to key union the CFMEU. Reports have also surfaced that Brazilian giant and fellow NSW producer Vale will cut 40 jobs from its Camberwell operation. However, there has also been a rise in the number of tenders which have been reissued in recent months with gencos indicating they are not prepared to pay prices being offered. It is a buyers market if ever there was one for coal right now, an industry analyst told ACR. Producers are having to look again at rationalizing their operations in the face of these prices and despite the forward curves we are being shown, there is not a lot of faith prices will recover anytime before Q3 2013. Meanwhile, its a very similar story in metallurgical coal markets. After improving to around $150/t FOB, spot prices for premium hard coking coal continue to hover around that level. A small light at the end of the tunnel is that BMA appears to be hoping to achieve $155-160/t for its December cargoes. On the downside, key Queensland export port Gladstone has reportedly sent out a note to producers to test whether closing one of its three loaders due to a lack of throughput would have a negative impact.

Port Kembla could close over dispute

Negotiations in an industrial dispute between Port Kembla Port Corporation and its marine pilots which guide vessels in and out of its New South Wales harbour are at a crucial point. The pilots union have applied to industrial umpire Fair Work Australia to undertake protected action, should further discussions surrounding a wages claim fail to resolve the issue. The result of the FWA application will be known this Friday November 9. Australian Maritime Union director Michael Fleming said the issues currently under negotiation are related to wages, insurance, income protection and fatigue management. At the end of September, Port Kembla had exported 10.38Mt of coal for the first nine months of 2012.

Game over for Cougar Energy UCG, for now

By Marian Hookham After a two year battle with the Queensland government, ASXlisted Cougar Energy has abandoned efforts to demonstrate underground coal gasification technology saying for now, UCG is dead in the water in Australia. The company is instead turning to conventional mining to unlock value in its coal assets while focusing on pushing ahead with its offshore UCG projects. New CEO Rob Neill, a self-confessed coal guy, has taken on the role of revitalising the company after founder Len Walker stepped aside to focus on Cougars UCG projects in Asia. Being a coal guy, his different set of eyes looked anew at the two coal deposits in Queensland, both originally pegged as UCG targets. They include the Wandoan thermal coal project in the Surat Basin with a JORC resource of 360Mt (not to be confused with Xstratas Wandoan), and the Mackenzie PCI asset in the Bowen Basin with an exploration target of 120-170Mt. Neither project have had much drilling but both are extremely well located in terms of a couple of key metrics. Both are close to existing operations - Mackenzie is adjacent to PCI operations such as Jellinbah and Yarrabee in the Bowen Basin, and Wandoan is close to the proposed 22Mtpa Xstrata thermal coal project in the Surat Basin. Importantly, both assets are blessed with decent access to infrastructure. Sure, some of it might need some upgrading but this access is something many junior coal developers would give their eye teeth for. Which might explain why Cougar, after flagging a sale of the two deposits in August has now decided to create a subsidiary vehicle in the shape of a new company called Kandoman Resources. Admittedly, the coal market has declined in the last two quarters, dragging down share prices of junior companies which in turn has made them cheap takeover targets. As Neill said, you only sell an asset once and clearly, an opportunistic offer right now could whisk away the coal deposits at heavily discounted prices. Exactly how investors will be given a chance to invest in the coal assets will ultimately be determined by who is sitting opposite the table, Neill said.

Queensland pledges support for juniors

The Queensland Newman government says it is actively reducing red tape in the coal sector and will continue to vigorously pursue policies and initiatives that reduce bureaucratic hold ups and encourage growth in the coal sector across the state. Mines minister Andrew Cripps was responding to the Queensland Resource Councils Exploration Report Card 2012 which pointed to the growing length of time taken by the government to grant exploration permits for coal (EPCs), ballooning out to 24 months from 17 months the year before. The minister said already two bills, the Mines Legislation Streamlining Act and the Greentape Reduction Act, had reduced the regulatory burden on resource companies and shortened the approvals processes from exploration through to full-scale production. The Report Card noted Queensland has about 9.362Bt of proven and probable coal reserves, a minor decrease from 10.552Bt in 2010-11, however, measured and indicated as well as inferred resources increased significantly to 94.876Bt in 2011-12, up from 80.967Bt the year before. Expenditure on coal exploration during 2011-12 continued to increase strongly, up by more than $260M to $718M compared with the previous year.

Australian Coal Report

Issue 0471 7 November 2012

Australian Coal Report

BRIEFS CONTINUED
APC to commence drilling
Australian Pacific Coal (APC) will begin preliminary site clearing and drilling early next week at its Cooroorah coal exploration tenement, which lies adjacent to the operational Jelinbah East mine in Queenslands Bowen Basin. The company intends to further the resource status of the tenement this year as a requirement for the mineral development licence application (MDLA 453), according to CEO Paul Byrne. The process has been assisted by the acquisition of additional recent exploration data including cross-sections from five drill holes and three seismic lines that intersect the tenement, he said. The Cooroorah site consists of two target areas including a main target with an estimated JORC-compliant inferred resource of 107Mt and a secondary shallow target located in the north of the licence between the Jellinbah fault and the Jellinbah East mining licence. A drilling program scheduled this month is aiming to elevate the resource to indicated and measured status in accordance with the JORC code. The coal projects will be moved into Kandoman, a non-UCG company, which will also house any other coal assets Cougar lays its hand on; opportunities that arise as it looks for suitable coal to gasify. We can now offer three different levels of investment: participation at the listed company level to ensure success of a diversified energy company; a wider resources play by participating in the value upside of Kandoman Resources; and the opportunity to get involved in specific exploration projects, Neill said. His clear preference is for Cougar to remain involved and eventually be mining coal, potentially under Cougars banner and not simply project managing on behalf of a large SOE. But, he readily acknowledges he will need funding, which is most likely to be sourced in Asia. An IPO of the coal assets is an option, in which Cougar would retain a significant stake, but is by no means the only one. Weighing heavily on Cougars perceived value is the legal action it is pursuing against the Queensland government after it shut Cougars $550M demonstration project in January 2011 when toxic chemicals were allegedly found in bore We are being water at the Kingaroy hamstrung in the site in 2010. We are being eyes of investors by the hamstrung in the eyes legal action. of investors by the - Rob Neill, CEO Cougar Energy legal action, Neill said commenting on the companys current value of around half a cent per share, or $7M (date dependent). Neill is about to embark on a roadshow to spruik the hidden upside inherent in the company, if only in the companys high quality coal assets. Placing a value on pre-JORCED deposits is always hard but Neill, a consultant in a previous life, believes given the merits of the two tenements their combined worth is somewhere between $60 to $80M. At the share price level that would imply a price of around 5 cents per share. On this basis Neill is hopeful of a stock re-rating and cash injection. Any money pumped into the company will be deployed to firm up the Mackenzie resource.

Union reiterates safety concerns

A damning report into the tragic mine explosion at the Pike River coal project in New Zealand, shows that coal companies cannot be trusted with regulating safety, a key Australian mining union says. We know how companies will behave if its left up to them, CFMEU said in a statement. The union was responding to a New Zealand royal commission report which found Pike River mines management failed in its duty of care to provide a safe workplace, which ultimately cost 29 workers their lives in November 2010. The CFMEU is urging the Queensland state government not to give into industry pressure to relieve unionappointed safety inspectors of the power to close down mines on safety grounds. Australias coal mining industry has world-leading safety laws and practice but theres always pressure from companies to cut back on red tape, the CFMEU said. They tried that in New Zealand, on the grounds that bosses would never knowingly put their workers in jeopardy. Pike River is the result.

More information on Cougars Indonesian UCG projects will be available in this months Indonesian Coal Report. If you are not already a subscriber to this publication and would like to request a complimentary copy, email ino@energypublishing.biz

Australian Coal Report

Issue 0471 7 November 2012

Australian Coal Report

Tax change can drive investment
By Lloyd Griffin Changes must be made to federal taxation legislation to spur investment into coal exploration in Australia, according to Australian Securities Exchange (ASX) CEO Elmer Funke Kupper. Speaking at the Queensland Resources Councils (QRC) annual Exploration Breakfast recently, Kupper said an exploration tax credit scheme, which allows loss-making exploration companies to pass some of their non-deductible exploration expenses on to their end investors, has worked well in other countries. Kupper says the schemes implementation in Canada has resulted in Exploration plays a that country becoming massive role for the an attractive destination for resources industry and a global resources scheme that enhances the companies to current and future activities undertake capital raising. of so many explorers is Leading junior coal developer welcomed. - Theo Psaros, Metrocoal Metrocoal said the scheme was precisely what the industry needs in the current challenging market conditions. With the current economic climate resulting in reduced access to capital, implementation of this will give the industry a significant boost, Metrocoals Theo Psaros told Energy Publishing. With exploration investment on a per metre basis declining in Australia, it is extremely timely that a major initiative such as schemes similar to Canadas successful flow-through-shares is strongly considered. The level of investment in exploration in Canada on the back of the flow-through-shares scheme is world leading. Exploration plays a massive role for the resources industry and a scheme that enhances the current and future activities of so many explorers is welcomed. QRC boss Michael Roche echoed these sentiments and said the peak mining body has been campaigning on this issue for some time now. Exploration is one of the keys to a sustainable resources industry in this state. It is the R&D for our sector, Roche said. We hope that the addition of Mr Kuppers voice to the calls for exploration tax credits will help put the issue back on the agenda. Greater exploration and resources production will generate more employment, wealth generation, increase royalty and tax contributions, and produce higher shareholder returns. The Queensland government was quick to throw its support behind junior explorers and said it has responded to the calls by the industry to make development more efficient. Minister for Natural Resources and Mines, Andrew Cripps, emphasised the LNP Governments record of reducing red tape for the resource sector in its first eight months in power. Already two Bills that seek to reduce the regulatory burden on resource companies and shorten approvals processes from exploration through to full-scale production, have passed State Parliament, Mr Cripps said. The Newman Government has identified the resources sector as a pillar of the Queensland economy and recognises the sector is integral to restoring health to the states economy. On a positive note, an industry scorecard released by the Queensland Exploration Council this week shows in the face of the global market slump, coal exploration in Queensland stayed strong despite a softening trend in global thermal and metallurgical coal prices. According to the scorecard, the market value of juniors in the minerals and resources sector has fallen by an average of 42% in 2012CY. Analysts suggest this all but rules out capital raising for the mining minnows in the current market unless done at a premium to the ailing share prices so any opportunities such as the tax scheme proposal are welcomed by the industry. QRC chief Roche summed up the situation by saying development was the backbone of the resources industry, and suggested anyone who thinks the world has finished exploring really does have rocks in their head.

INTERNATIONAL NEWS
Colombian export resurgence
With industrial angst seemingly in check for now, Colombian coal exports have ramped up during September to reach 6.79Mt, a rise of 27.5% from the August total of 4.92Mt. Colombian thermal coal producers appear to be on track to hit 2013 production and sales quotas comfortably sources say. Energy Publishings Coal Americas reports the countrys largest producer, Cerrejon, is sold out well into the first quarter of next year. Drummond and Prodeco will endeavour to rail as much coal as possible to the ports during the fourth quarter in an effort to deliver delayed cargoes. Despite all of the economic gloom and discussions about how the European market is over-supplied, Colombian producers are doing amazingly well, a trading source told Coal Americas. A lot of US coal is out of the money right now in Europe, prices arent competitive. But Colombian coal is doing fine, particularly in the United Kingdom, Portugal and Turkey. Colombian coal is being offered in Europe at prices in the $76 /t FOB Puerto Bolivar range. Drummond shipped 2.22Mt of coal in September, 1.01Mt month-on-month. Prodeco exported 944kt, up 448kt m-o-m with their export level is expected to exceed 1Mt per month during the remainder of the year. Cerrejon exported 2.85Mt of coal in September, a 290kt m-o-m increase. Meanwhile, Colombias Ministry of Mines & Energy has lowered its coal production estimate for 2012 to 93Mt, down from 97Mt, due to the labor strikes.

Chinas PMI gains ground

After adjusting for seasonal factors, the HSBC Purchasing Managers Index (PMI) for China - a composite indicator designed to give a single-figure snapshot of operating conditions in the manufacturing sector - posted 49.5 in October. Although rising from 47.9 in September it still signals a full year of monthly deteriorations in the Chinese manufacturing sector although, with the PMI at an eight-month high, the latest data indicates the rate of deterioration was marginal. An index above 50 is interpreted as expansion in the sector while below that level indicates the market is contracting.

Australian Coal Report

Issue 0471 7 November 2012

Australian Coal Report

Chief economist with HSBC, Hongbin Qu, said the October PMI implies Chinas industrial activity continues to bottom out following a modest pick-up last month. We expect a continuation of policy easing to further boost domestic demand and counterbalance the external weakness, leading up to a gradual growth recovery in the coming quarters, he said.

TENDERS
KOWEPO has issued a spot tender for 130kt of thermal coal, according to The Tex Report. The tender, KOWEPO-COALAPSP-09, is for NCV min. 5,600kcal/kg. Bids for Russian coal will not be accepted for this tender. Loading is January 16 to 31 from Australia, January 17 to February 1 from Canada or January 26 to February 10 from South Africa. Bids close November 9. Taipower has issued a tender for 750kt of thermal coal for shipping in Panamax vessels between February and April 2013. TPC1023-GS requires the following coal quality: 5,000kcal/kg, 28% TM, 15% ash, and 1.1% S. Bids close November 16. Korea Midland Power Company has issued a spot tender for 440kt of thermal coal for use at the Boryeong power plant, according to The Tex Report. Tender KOMIPO-Bid Notice-2012-6 is for min. NAR 4,600kcal/kg coal for delivery in five shipments in January and one in February. Bids close November 6. Tex reports the last time KOMIPO issued a tender, 130kt of Australian coal and 770kt of Indonesian coal were awarded. Korea East West Power has issued a spot tender for 670kt of thermal coal. The tender, EWP-COAL-2012-JT02, is for NCV min. 5,700kcal/kg coal for delivery between January and February, 2013. Bids close November 7. Australian coal was awarded a spot tender issued by KOWEPO last month which closed on October 18. The tender, KOWEPOCOAL-2012-APSP-08, was awarded to one Capesize vessel of Australian coal at a contract price of US$80-81/t FOB (NAR 6,080kcal/kg), according to The Tex Report. Shipping is between December 2012 and January 2013. Tex reports KOWEPOs previous tender for a five year term for a total of 680kt was awarded to US and Indonesian coals in October.

Strike action called off in SA

As fears of a strike contagion in the South African coal industry mount, South Africas National Union of Mineworkers (NUM) has called off a wage-related strike at Coal of Africas Mooiplaats Colliery, located 200km east of Johannesburg in South Africa. A new wages agreement covering about 370 employees represents a 26% cost increase to the company, up from the original offer of 22%, and is inclusive of medical aid assistance, housing allowance as well as shift and underground allowances. CoAL CEO, John Wallington, said management has initiated actions designed to reduce operational costs and improve efficiencies at the mine. Management is fully aware of the impact the strike has had on the profitability of the mine and is implementing various initiatives to address the long term viability of the operation. We will complete the full review and restructuring of the colliery that commenced prior to the strike action, he said. Strike action and challenging geological conditions resulted in ROM coal production at Mooiplaats decreasing by 20.43% to 275kt during the September quarter. The Fenoco Rail strike interrupted coal shipments from Drummond and Prodecos mines for about a month earlier this year. A three month long strike at Prodecos La Jagua mine has been sent to arbitration.

ZYL revises project timeline

ASX-listed coal developer ZYL Limited has announced it will revisit its Bankable Feasibility Study on the Mbila coal project in South Africas KwaZulu-Natal region. After the review, the company expects to increase or decrease the size and scale of the coal project. The latest estimate of the JORC-compliant resources at the site is 154.2Mt of coal and ZYL is keen to create a larger tonnage project to meet the current demand from potential strategic partners who are seeking an expanded production profile. ZYL says the timeline for development will be extended pending the review, however it stressed this does not detract from the fact that the underlying project and its potential remains in tact. The company says it has received expressions of interest for domestic off-take exceed the initial planned production of anthracite.

Pike River report blames recklessness

A deadly explosion at the Pike River coal mine in New Zealand which killed 29 workers in November 2010 was the result of production quotas trumping safety a commission has found, according to local media. A royal commission into the accident reports there was clearly an attitude of recklessness at the mine and declared the mines management failed to notice dangerous warning signs which pointed to a high chance of an explosion at the site. The mines ventilation system has been declared inadequate and the mine lacked appropriate safety management procedures, the commission found.

Australian Coal Report

Issue 0471 7 November 2012

Coal Chain Australia

NEWCASTLE
Port Waratah Coal Services (PWCS) operated Port of Newcastle terminal throughput for the week to November 6 was 1.93Mt, a fall of 70kt w-o-w. The 133Mtpa capacity terminal ran at 75.4% of nominal capacity for the week. PWCSs month-to-date annualised throughput rate was 99.55Mt and the YTD annualised rate was 106.14Mt. PWCS has a shiploading target of 124.5Mt for 2012. The PWCS stockpile volume at November 6 was 985kt, just shy of the normal 1-1.2Mt range for the most efficient loading operations at the terminals. The PWCS ship queue had six vessels at November 6, four less than the previous week and well below the optimal 2225 vessels in the queue for the most efficient operation of the terminals. The forecast average time for a vessel in the queue is 1.93 days, a slight drop from last weeks figure of 2.11 days. The Hunter Valley Coal Chain Coordinator (HVCCC) estimates PWCSs ship queue will increase to 14 vessels at the end of October based on nominations of 8.5Mt and forecast shiploading of 8.3Mt. PWCS has been notified of the arrival of 18 vessels to load 1.66Mt of coal, a fall of eight vessels from the previous week. There will be maintenance undertaken on shiploader 7.10 from November 14 to 15.

VESSEL QUEUE NEWCASTLE

Test
45 35 25 15 5

PORT WRAP
DALRYMPLE BAY The Dalrymple Bay Coal Terminal (DBCT) throughput for the week ending November 5 rose 86kt week-on-week to 1.41Mt. The 85Mtpa capacity coal terminal operated at 86% of its nominal weekly capacity, on par with the previous week. In November 2011, DBCT had an average weekly throughput of 1.15Mt. Coal stocks at DBCT fell during the week from 1.15Mt to 887kt, short of the 1-1.2Mt stock range required for the most efficient operation of the terminal. DBCT received on average 18 trains per days, three less than the previous week and approaching the 24-27 trains per day the terminal receives during normal operations. As at November 5, the DBCT ship queue had 12 vessels, an increase of one vessel w-o-w, with 11 of the vessels having coal available at the mines. DBCT normally requires about 20 vessels in the queue for optimal berthing operations. GLADSTONE Throughput at the Port of Gladstone for the week ending November 5 was 1.23Mt, an increase of 318kt week-on-week. The RG Tanna and Barney Point coal terminals with a combined nameplate capacity of 76Mtpa operated at about 84% of their combined nominal weekly throughput capacity. In November 2011, the Gladstone terminals had a combined average weekly throughput of 1.18Mt. For the week to November 5, the volume of coal railed to the Port of Gladstone was 1.11Mt, a rise of 118kt w-o-w. The coal stockpile level fell by 80kt w-o-w to 2.48Mt, well within the 2-3Mt required for the most efficient operation of the terminals. There are currently 12 vessels in the ship queue at the Port of Gladstone, with seven of these live. The optimal number of vessels is usually six to eight.

WEEKLY LOADING RATES NEWCASTLE (Mt)

Newcastle weekly loading rates
2.8 2.6 2.4 2.2 2.0 loading rates current port capacity 2.6 2.5 2.4 2.3 2.2 2.1 2 1.9

Mt

1.8 1.6 1.4 1.2 1.0 0.8

Source: PWCS

WEEKLY THROUGHPUT NEWCASTLE (Mt)

Test
2.00 2.50 2.00 1.50 1.00 0.50 0.00 0.50 0.00 1.50 1.00

Source:PWCS

t shipped

closing stock port

Australian Coal Report

Issue 0471 7 November 2012

Coal Chain Australia

WEEKLY SHIPPING
LOAD PORT Drummond Mobile Prince Rubert Dalrymple Bay VESSEL TBN TBN Intergris TBN TBN DWT 65,000 70,000 145,000 150,000 DISCHARGE PORT LOAD DATE Ld/Dis.Terms US$/t SHIPPER Tarragona 10/15 Nov 25000C/24000C 14.00 Enel Isdemir 5/15 Nov 25000C/40000C 17.10 Erdemir S Korea 1/8 Nov 45000C/25000C 14.89 Kepco Qingdao 10/25 Nov Scale/25000C 12.00 Pacific Shipping

COAL SHIPS WAITING BY PORT (AUSTRALIA)

Newcastle Coal ships waitingDalrymple Bay by Port (Australia) 80 70 60 Gladstone Hay Point

Vessels

50 40 30 20 10 0

11-Sep-12 18-Sep-12 25-Sep-12 Newcastle Gladstone Dalrymple Bay Hay Point

SOURCE: ISS

2-Oct-12 23 9 3 3

9-Oct-12 16-Oct-12 23-Oct-12 30-Oct-12 21 17 6 6 11 15 7 6 10 0 7 3 8 14 8 2

6-Nov-12 14 0 12 3

36 2 5 2

34 3 9 2

38 3 5 2

Australian Coal Report is copyrighted 2012 by Energy Publishing Pty Ltd. Information published is considered accurate and reliable, but no responsibility or liability will be accepted for any error or omission. www.coalportal.com www.energypublishing.com.au Distribution to nonsubscribers is a breach of copyright. Tel +61-7-3020-4000 Fax: +61-7-3102-9151 | Editor: Marian Hookham Email: marian.hookham@energypublishing.biz

Australian Coal Report

Issue 0471 7 November 2012

Coal Chain Australia

RS PLATOU COAL REPORT REPORT 6 NOVEMBER 2012
Vessel Cape Route Gladstone/Qingdao Vancouver/Qingdao RBCT/Qingdao Gladstone/Krishnapatnam (India) RBCT/Krishnapatnam Mini Cape 110,000Mt (5%) Brisbane/Kaohsiung (Taiwan) Gladstone/Krishnapatnam (India) Gladstone/Qingdao Newcastle/Qingdao Supramax 50,000Mt (10%) Gladstone/Krishnapatnam (India) Taboneo/Krishnapatnam Taboneo/Qingdao Vancouver/Qingdao US$/tonne Vessel 11.50 12.80 13.10 16.70 12.90 14.30 12.70 13.00 14.80 16.00 19.90 11.30 11.60 21.70 Panamax 70,000Mt (10%) Gladstone/Qingdao Newcastle/Qingdao Balikpapan/Qingdao Lyttelton/Qingdao (62k) Vancouver/Qingdao RBCT/Qingdao Gladstone/Krishnapatnam (India) RBCT/Krishnapatnam 13.60 15.00 8.70 19.10 15.70 17.30 16.40 15.00 Post Panamax 90,000Mt (10%) Route Gladstone/Qingdao Newcastle/Qingdao Vancouver/Qingdao Brisbane/Kaohsiung (Taiwan) Gladstone/Krishnapatnam (India) US$/tonne 13.40 15.00 15.50 13.30 15.90 150,000Mt (10%) Newcastle/Qingdao

Source: RS Platou (Australia) Pty. Ltd. Contact details: drycargo.australia@platou.com

BALTIC DRY INDEX (BDI)

Chart Title 1050 1000 950 900 Current week
SOURCE: DRYSHIPS.INC

1043

947

last week

FREIGHT
The recent run of improvement in the Capesize market came to an end last week while rates for smaller bulkers continued to fall. Average Capesize earnings began the week positively by rising to $16,934/day before falling back to $15,074/day, with Pacific round voyage rates dropping around $3,000/day to $17,400/day. Tracking this fall, the Newcastle to Qingdao spot voyage rate ended the week $0.50/t lower at $13.90/t. One of the main driving forces behind Octobers jump in Capesize rates was the jump in iron ore cargo availability from Brazil, where exports jumped to 32.6Mt, up almost 5Mt on September. This coincided with an even higher number of fronthaul fixtures reported to the Baltic Exchange than during the Cape market revival of the 2H11 and was supplemented by the arrival of new Australian iron ore export capacity (where exports are on course for an annual gain of approaching 50Mt this year). A third factor helping to tighten ship supply:demand balances in the Capesize sector has been increased congestion at Chinas iron ore ports, where 50 vessels are currently waiting to berth compared with around 30 two weeks ago. Meanwhile, average earnings for Panamaxes drifted down by around $300/day to a three-week low of $6,061/day. This was led by falls in the Atlantic, where round voyage rates softened by almost $900/day to below $4,000/day. With bunker prices weakening by another $20/t last week (to their lowest levels since the end of July), spot Panamax voyage rates in all areas saw declines: the Puerto Bolivar to Rotterdam spot rate sank $1.05/t to $10.65/t while the Newcastle to Qingdao route dropped $0.60/t to $13.20/t.

SOURCE: SSY - SIMPSON, SPENCE AND YOUNG

Australian Coal Report

Issue 0471 7 November 2012