5/11/2016 Japan power companies securing Colombian thermal coal cargoes: sources - Coal | Platts News Article &

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Japan power companies securing Colombian

thermal coal cargoes: sources
Perth (Platts)--5 May 2016 948 am EDT/1348 GMT

Several cargoes of Colombian 5,800 kcal/kg NAR thermal coal have been booked by Japanese power companies through an intermediary in
recent weeks including one Supramax and two Panamax cargoes, market sources said Thursday.

The landed cost of Colombian cargoes in Japan was put at $59/mt CFR including $16-$18/mt freight for Panamax ships, and $2 less than the
delivered cost of Australian 6,000 kcal/kg NAR thermal coal pegged at $61/mt, said market sources.

One trader said that Colombian thermal coal was still pricing into Asia on low rates for cargo ships.

"It is just a matter of freight arbitrages and where FOB prices are going for Colombian," he said.
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CONTACT SALES MORE INFORMATION

Another trader said he had heard some Japanese power utilities had been looking for Colombian coal to take advantage of the bearish freight
market.

On a FOB 90-day price basis, Colombian thermal coal has traded in a steady range of $42-$44/mt since early January, according to S&P Global
Platts market data.

There is currently a di erential of almost $14/mt between CIF Japan and FOB Colombian prices on a 6,000 kcal/kg NAR basis, making sales to
Japan an attractive opportunity for Colombian coal shippers.

Another market source said he was not in the least surprised that Colombian coal was headed to Japan.

"Some of those are trial shipments," he suggested of the Colombian bookings.

One of the larger Japanese trading houses with experience of handling deals for Colombian cargoes arranged the shipments on behalf of
Japanese buyers, sources said.

NEWCASTLE PRESSURE

Japanese buyers' purchases of Colombian thermal coal could put signi cant downward pressure on Australian prices, market sources said.

Depressed prices at the European trading hub for thermal coal, which have been rangebound since March at around $46/mt CIF ARA, are
incentivizing trading companies to move Colombian cargoes into the Asian market, sources said.

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5/11/2016 Japan power companies securing Colombian thermal coal cargoes: sources - Coal | Platts News Article & Story
One drawback for Asia-based buyers interested in purchasing Colombian coal is the voyage time.

For the Colombia to Japan trading route, the voyage time was put at 45 days, by one trader.

Vessels carrying Colombian coal to Japan are likely to be taking a route around South America's southern tip, Cape Horn, and then across the
Paci c, sources said.

TRIAL SHIPMENT

A 50,000-60,000 mt Supramax shipment that has shown up in vessel line-ups for Colombian coal at local ports was destined for a large
Japanese power company, J-Power, as a trial shipment, sources said. J-Power did not respond to a request for comment.

J-Power has exibility on taking a wider variety of imported thermal coal including Colombian, sources said.

They also said a Panamax shipment from Colombia was bound for a smaller power utility in southern Japan, Shikoku Electric Power. Shikoku
did not respond to a request for comment.

Another Panamax cargo was also due to be shipped to Japan's power sector in the coming weeks.

Japanese general industry such as cement producers were seen as unlikely customers for Colombian thermal coal.

Colombian thermal coal is not suitable for all power stations in Japan, which are mostly attuned to operating on Australian 6,000 kcal/kg NAR
thermal coal as a feedstock.

"Basically, the coal speci cation [for Colombian] such as selenium doesn't meet the standards of most JPUs, so we don't see this transaction
happening in the long term because of the freight market and quality perspective," a market source said.

Newcastle thermal coal was seen trading at the eastern Australian trading hub at $50-$51/mt FOB 6,000 NAR, and Panamax vessel freight up to
Japan was estimated this week at $11/mt, sources said.

--Mike Cooper, michael.cooper@spglobal.com

--Edited by Jonathan Dart, jonathan.dart@spglobal.com

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