LC News Friday, 10th June 2011

TABLE OF CONTENTS
CONTACT DETAILS ................................................................................................................................ 2 COAL PRICES ......................................................................................................................................... 3 Coal Market Overview............................................................................................................................ 3 Coal Market Prices ................................................................................................................................ 3 SGX AsiaClear OTC Sub-Bituminous Coal FOB Indonesia Swaps .......................................................... 4 SUMMARY OF CHINA COAL PRICES ..................................................................................................... 5 COAL MARKET NEWS ............................................................................................................................ 6 Newcastle coal exports leap 31 percent.................................................................................................. 6 Dalrymple bay terminal coal exports maintain rising trend in early June ................................................... 6 Spain Boosts Incentives to Coal, Gas Power Plants, Cinco Says............................................................. 6 Grindrod plans expansions of its coal terminals....................................................................................... 7 AEP to retire 6,000 MW of U.S. coal generation American Electric Power................................................ 7 Colombia keeps coal output target despite heavy rains ........................................................................... 8 Colombia passes plan to distribute coal,oil tax revenue........................................................................... 8 Euro Coal-Jly S.African trades at API4 minus $3/T.................................................................................. 8 COAL Market seeks clearer direction................................................................................................... 9 European Coal Derivatives Rise, Nearing Highest Close in a Month ........................................................ 9 Merkel calls for 10-20 GW new power plant capacity............................................................................... 9 Czech Coal Eyes Higher Prices in New Deals, Hospodarske Reports...................................................... 9 JSW, Top EU Coking-Coal Producer, Sets Schedule in Largest 2011 Polish IPO................................... 10 Endocoal to raise A$14.9M for projects ................................................................................................ 10 Australia exports of coal and iron ore Jan-Apr 2011 .............................................................................. 10 QRC calls on government to get mines back into swing ........................................................................ 10 Jindal extends Rocklands offer period .................................................................................................. 10 Coal producers to push for third party participation in unviable mines .................................................... 11 Indika aims to produce 31 million tons of coal in 2011 ........................................................................... 11 Chamber objects to Eskom, Transnet changes ..................................................................................... 11 Waterberg coal offtake deal set to last 38 years.................................................................................... 12 SAs coal industry in a strong position but also grappling with major challenges SACPS head........... 12 Riversdale takes delivery of six locomotives as it moves towards completing Moz coal project ............... 13 South Korea eyes Indonesia coal to close cost gap............................................................................... 13 China miners, Japan utilities may settle coal price at US$145/T ............................................................ 14 Shandong coal miners hike coking coal price........................................................................................ 14 Coking coal softens at China ports ....................................................................................................... 14 Gansu energy-using cos to get 14 mln T coal from Xinjiang................................................................... 14 Huanghua coal shipment up in May...................................................................................................... 14 Weekly CR China Thermal Coal Price Index Analysis and Forecast ...................................................... 14 Weekly CR China Coking Coal Price Index Analysis and Forecast ........................................................ 16 Weekly CR China Met. Coke Price Index Analysis and Forecast ........................................................... 18 FREIGHT................................................................................................................................................ 19 Dry bulk on retreat mode...................................................................................................................... 20 OIL ......................................................................................................................................................... 21 Oil Futures Rise to One-Week High as OPEC Fails to Agree on Output Quotas..................................... 21 STEEL.................................................................................................................................................... 22 Baosteel announces price cut for July................................................................................................... 22 JSW Steel May crude ssteel production up by 2%................................................................................. 22 Taiwans CSC Issues output and sales results for May.......................................................................... 22 Outokumpu sees E.Asia stainless steel demand staying slow in Q3 ...................................................... 22 Turkey steel exports dip 8.8 percent in May .......................................................................................... 22 IRON ORE.............................................................................................................................................. 23 Thursday, 9th June 2011 ................................................................................................................. 23 IRON ORE NEWS................................................................................................................................... 26 Iron ore spot extends gains, limited high grade supply .......................................................................... 26 Iron Ore May Remain around two week high, Simpson Spence says..................................................... 27 Ban sought on transport of iron ore in state........................................................................................... 27 Indias april May iron ore exports from Goa port fall source.............................................................. 27 Cabinet gives thumbs up to ten-commodity beneficiation strategy ......................................................... 27 Exxaro reviewing its options after Noble trumps Territory bid................................................................. 28 Africa may turn major iron-ore exporter after 2020 ................................................................................ 28 FORTHCOMING CONFERENCES.......................................................................................................... 29
London Commodity Brokers Page 1 of 32 Friday, June 10, 2011
CONTACT DETAILS
London Head Office st 1 Floor 9 Savoy Street London WC2E 7ER United Kingdom Tel: +44 20 7240 1112 Coal Desk: +44 20 7010 7500 Iron Ore Desk +44 20 7010 7501 Options Desk +44 20 7010 7502 F: +44 (0)20 7240 5122 Email: info@londoncommoditybrokers.com Clive Murray - CEO Paul Graham-Clarke Managing Director Stephen Petchey Jessica Hydlem an Helene Mitreva Jamie Jones Chris Hudson Ted Larmour Emma Shillingford Ben Webb Myles Clement Kenny Groth Steve Gong Phil Simms Michael McDerm ott Ritunjay Mehta - Dubai Manager Sushil Shinde (Mobile +97 1554545394) Lalit Lodha (Mobile: +97 1554545364) Siddharth Banthia Krishan Malu Yallappa Rayannache
Dubai Office Suite no. 3702, Liwa Heights, Jumeirah Lake Towers Dubai T: +97 144534200 F: +97 144534214 Johannesburg Office 23 Wellington Road Parktown, 2193 Johannesburg South Africa T: +27 11 486 9524 F: +27 11 642 6011 Singapore Office Level 30, Six Battery Road Raffles Place, 049909 Singapore T: +65 6725 6434 / 6435 F: +65 6550 9898 Hong Kong Office Level 19, Two International Finance Centre (2 IFC) 8 Finance Street, Central Hong Kong T: +852 2816 4326/7/8 F: +852 3010 0087 China Office 2111-B, Flagship Tower, Cyber Port, 40 Hong Kong Mid Road Qingdao, 266071 China T: +86 532 8667 8682 F: +86 532 8667 8683
Bevan Jones Johannesburg Manager Tracy Zungu Emma Franz
Gareth Hudson - Singapore Manager James Graham-Clarke
Stuart Murray - Hong Kong & China Manager Victor Chow Claire Cheng
Becky Bi 40 , 2111-B : +86 532 8667 8682 : +86 532 8667 8683
London Commodity Brokers
Page 2 of 32
Friday, June 10, 2011
COAL PRICES
Coal Market Overview th Thursday, 9 June 2011, the market opened bright and early and $60c up on the prompt, cal API2 remaining flattish. Physical saw 9 trades across the board, FOB saw 650,000 tonnes go through including a US$120.75 in August, and 150,000 tonnes in Q4 FOB RB at US$124. FOB NEWC saw an index -$1.00 Q4 for 225,000 tonnes. More action in the prompt market where we saw a June FOB bid at US$114.50 and June DES Rott at US$122.50 for 50kt CRAPSUS which was index -$2.00 to paper at the time. Yesterday Aug FOB traded at US$120.00 whereas today US$120.75. Helene Mitreva Coal Market Prices
Below is a list of prices that we offered the market Thursday 9th June 2011, the prices are fixed prices, the prices represented by # refer to those that are index based. The coal paper mid rate is the point between the bid and offer spread on coal derivatives.
DES / CIF ARA

Date
Bid Offer -#$1.00 -#$0.75 -#$1.10 API #2 Paper Mid
FOB Richards Bay

Bid $115.00 $114.50 -#$2.00 #$0.75 -#$0.75 Offer API#4 Paper Mid Bid
FOB Newcastle
Offer NEWC Paper Mid
June-11 July-11 Aug-11
$ 124.45 $ 125.23 $ 126.00
$ 120.25 $ 121.17 $ 122.00

$121.00 -#$0.75 $124.00
$ 121.00 $ 123.45 $ 124.40
Sep-11 Q3 11 Q4 11 Q1' 12 Q2' 12 CAL 12 CAL 13 CAL 14 CAL 15
$ 126.78 $ 126.00
$120.50
$120.95 -#$1.50 #$0.25 $ 122.83
$ 125.35 $ 124.40
$ 122.00
-#$1.00 #$1.00 -#$0.60 -#$1.00 124.50 $ -#$0.90-#$0.75 -#$1.30 -#$0.10
$ 128.60
$ 127.25
$ 130.20 $ 130.50 $ 130.75 $ 133.40 $ 135.90 $ 138.15
-#$0.50
$ -#$1.00 126.20 $ -#$0.25 126.40
-#$0.60 +#$0.40 -#$0.50 -#$0.50
-#$0.10 +#$0.50 +#$0.50
$ 129.50 $ 129.70 $ 129.90 $ 130.55 $ 132.40 $ 134.40
-#$0.05
+#$0.65
$ 126.65 $ 128.30 $ 130.65 $ 132.90
Coal Paper Market Mid Point Curve $150.00

API #2 Paper Mid

API#4 Paper Mid NEWC Paper Mid
$140.00
$130.00
$120.00
$110.00
Ju ne -1 1
11
13
12
14
Ju ly -1 1
Au g11
Se p11
11
Q 1' 12
Q 2' 12
C AL
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C AL
Q 4
C AL
C AL
Q 3
15
SGX AsiaClear OTC Sub-Bituminous Coal FOB Indonesia Swaps
Below are the Daily Settlement prices of SGX AsiaClear OTC Sub-Bituminous Coal FOB Indonesia Swaps as at 8.00pm Singapore times on Thursday, 9th June, 8pm Singapore time).
Daily Settlement Prices of SGX AsiaClear OTC Sub-Bit Coal FOB Indonesia Swaps Daily Prev Daily Settlement Settlement US$ Price Price Change 88.25 88.32 -0.07 88.53 88.56 -0.03 88.87 88.9 -0.03 89.21 89.24 -0.03 89.8 89.83 -0.03 89.8 89.83 -0.03 89.89 89.92 -0.03 90.33 90.42 -0.09 90.33 90.42 -0.09 90.42 90.51 -0.09 90.93 91.01 -0.08 90.93 91.01 -0.08 91.02 91.1 -0.08 91.32 91.4 -0.08
Daily Settlement prices for SGX AsiaClear OTC Indonesia Sub-Bit Coal Swaps
100
Contract Period
Jun-11 Jul-11 Aug-11 Sep-11 Oct-11 Nov-11 Dec-11 Jan-12 Feb-12 Mar-12 Apr-12 May-12 Jun-12 Jul-12
% Change
-0.08% -0.03% -0.03% -0.03% -0.03% -0.03% -0.03% -0.10% -0.10% -0.10% -0.09% -0.09% -0.09% -0.09%
Daily Settlement Price Prev Daily Settlement Price
95
90
85
80
75
11
12
11
11
12
2 -1 ay M 1-
11
11
11
l -1
-1
n-
n-
b-
v-
r-1
ct-
g-
p-
Ju
ar
No
De
Fe
Ju
Ja
Ap
Au
Se
1-
1-
1-
1-
1-
1-
1-
1-
1-
1-
1-
C ontract Months
# Above daily settlement prices are for market-to-market open positions on contract month basis Below daily settlement prices are summarized below in quarterly and yearly basis and are for reference only
The Indonesian sub-bituminous FOB marker is an assesment of the price of this quality coal delivered into ocean going vessels from a range of East and South Kalimantan load-outs. It represents the types of coal currently supplied by Adaro, Kideco, Bumi Resources (Melawan), ABK (Loajanan) and Straits Asia (Jembayan) amonst others Indonesian sub-bituminous coal specs: 4,900 NAR, 28% max Total Moisture, 40% Vols, 10% max Ash, 1.0% max Sulphur, 1,200C AFT (IDT), basis 20,000t / day loading refer: http://cr.mccloskeycoal.com/
Period
Q311 Q411 Q112 Q212 Cal 12
Average DSP
Prev Averag DSP
US$ Change
-0.03 -0.03 -0.09 -0.08 -0.08
% Change
-0.03% -0.03% -0.10% -0.09% -0.09%
88.87 89.83 90.36 90.96
88.9 89.86 90.45 91.04
Product Name: SGX OTC Sub-Bituminous Coal FOB Indonesian Swap Contract Size: 1 lot = 1,000 metric tonnes
Trade Registration hours (Singapore 8.00am - 4.00am Last Trading Day : 8.00am - 8.00pm Time)
91.06
91.14
Last publication day (Friday) of IHS McCloskey Indonesian Sub-Bitumous FOB marker in the contract month
Last Trading Day Final Settlement price Cash Settlement using the arithmetic average of all publications of HIS
For more information please contact Mr. Tan Say Liang at sayliang.tan@sgx.com (DID: +65 6236 5130) or Mr. Kenneth Ng at kennethng@sgx.com (DID: +65 6236 8388).
Source: www.sgx.com/asiaclear
MCCloskey Indonesian Sub-Bitumous FOB marker in the expiring contract month, rounded to 2 decimal places
http://www.sgx.com/wps/portal/marketplace/mp-en/products/asiaclear/commodities
Page 4 of 32
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12
SUMMARY OF CHINA COAL PRICES

CCIV - Comparative CFR Import Value Origin Brand of Coal GAR/ NAR Terms *CCIV US$ *CCIV US$ + / - from prev week + / - on CFR US$
NAR
>6,000 >5,500 >5,000 >4,500 >4,000
Specification
9-Jun-11 890.00 840.00 745.00 650.00 520.00 62.00 51.00 51.00 $ $ $ $ $ $ $ $
2-Jun-11 885.00 840.00 740.00 640.00 520.00 62.00 53.00 53.00
Qinhuangdao FOBT - (refer China Coal Resources - Daily Market Watch)

Qinhuangdao Qinhuangdao Qinhuangdao Qinhuangdao Qinhuangdao Datong Premium Blend Shanxi Premium Blend Shanxi Blend Common Blend Common Blend NAR NAR NAR NAR NAR CV 6,000, V 25 - 28%, S 0.5 - 1%, Mt 10 - 13% CV 5,500, V 25 -28%, S < 1%, Mt <12% CV 5,000, V 24 - 27%, S <1%, Mt <13% CV 4,500, V 25- 28%, S <1%, Mt <14% CV 4,000, V 25 - 28%, S < 1%, Mt <15% FOBT FOBT FOBT FOBT FOBT
106.23 99.89 87.86 75.82 59.35 9.54 7.85 7.85
$ 105.59 $ $ $ $ $ $ $ 99.89 87.22 74.56 59.35 9.54 8.15 8.15
5.00 5.00 10.00 -2.00 -2.00
$ $ $ $ $ $ $ $
0.63 0.63 1.27 (0.31) (0.31)
China Coastal Freight

Qinhuangdao - Guangzhou, 40 - 50,000 DWT Qinhuangdao - Shanghai, 20 - 30,000 DWT Qinhuangdao - Ningbo, 15 - 20,000 DW T
8-Jun-11
1-Jun-11
Difference
Note: To determine landed cost of China coal to other China ports use FOBT Qinhuangdao rate + Local Freight + Allowance of RMB 50.00/mt (US$7.63) for Port Handling Charges Indicative Guangzhou Stock Pile Price based on Ex Qinhuangdao FOBT
Guangzhou Guangzhou Guangzhou Guangzhou Guangzhou Datong Premium Blend Shanxi Premium Blend Shanxi Blend Common Blend Common Blend
9-Jun-11
Exstock Exstock Exstock Exstock Exstock
2-Jun-11 $ $ $ $ $ 120.42 114.08 102.05 90.01 73.54 997.00 952.00 852.00 752.00 632.00 $ 119.78 $ 114.08 $ 101.41 $ $ 88.74 73.54 5.00 5.00 10.00 $ $ $ $ $ 0.63 0.63 1.27 -
NAR NAR NAR NAR NAR
>6,000 CV 6,000, V 25 - 28%, S 0.5 - 1%, Mt 10 - 13% >5,500 CV 5,500, V 25 -28%, S < 1%, Mt <12% >5,000 CV 5,000, V 24 - 27%, S <1%, Mt <13% >4,500 CV 4,500, V 25- 28%, S <1%, Mt <14% >4,000 CV 4,000, V 25 - 28%, S < 1%, Mt <15%
1,002.00 952.00 857.00 762.00 632.00
Note: To convert local China coal RMB prices to Comparative CFR Import Values we calculate as follows: Local China RMB /mt / 1.03 Management Overheads including cost of LC - RMB 50.00 Port Handling / 1.17 VAT / RMB 6.55 Exchange = CCIV US$/mt CCIV represents the equivalent US$ CFR value for the coal currently available on stock pile. SELECTED PORT STOCK PILE PRICES 6-Jun-11 30-May-11 Guangzhou Port - Domestic China Coal Prices
Shanxi Shanxi Shanxi Shanxi Shaanxi Shanxi
Shanxi Premium Blend Yitai #3 Shanxi Blend Shaanxi Blend Shemu Blend #3 Shanxi Blend
NAR NAR NAR NAR NAR NAR
5,500 5,500 5,000 4,950 4,900 4,400
CV 5500, A 12%, V 28%, S0.5%, Mt 12% CV 5500, A 8%, V 30%, S 0.4%, Mt 16% CV 5000, A 25%, V 25%, S 0.85%, Mt 9.5% CV 4950, A 25%, V 28%, S 1%, Mt 13% CV 5100, A 11%, V 29%, S 0.4%, Mt 18% CV 4400, A 35%, V 26%, S 1.2%, Mt 6%
Ex Stock Ex Stock Ex Stock
965.00 945.00 865.00 845.00 815.00 720.00
$ $ $ $ $ $
115.73 113.20 103.06 100.53 96.73 84.69 945.00 865.00 845.00 815.00 720.00 $ 113.20 $ 103.06 $ 100.53 $ $ 96.73 84.69 $ $ $ $ $ -
Ex Stock Ex Stock
Ex Stock
Guangzhou Port - Imported Coal Prices Indonesia Indonesia Indonesia Indonesia Indonesia Indonesia Australia South Africa Indonesia Thermal Indonesia Thermal Indonesia Thermal Indonesia Thermal Indonesia Thermal Indonesia Thermal Australian Thermal South A Thermal NAR NAR NAR NAR NAR NAR NAR NAR 5,300 5,100 4,700 3,700 3,400 3,200 5,500 6,000
NAR 5300, V(ad) 38.82%, A (ad) 5.9%, S (tad) 0.8%, M(t) 20 NAR 5100, V(ad) 39%, A (ad) 9%, S (tad) 0.8%, M(t) 20% GAR 5900, NAR 4700, V(ad) 35%, A (ad) 5%, S (tad) 0.31%, M (t) 28% NAR 3,700, V(ad) 40%, A (ad) 3.1%, S (tad) 0.2%, M(t) 34% NAR 3,400, GAR 5,139 V(ad) 42%, A (ad) 5%, S (tad) 0.3%, M (t)39% NAR 3,200, GAR 5,000 V(ad) 42%, A (ad) 7%, S (tad) 0.7%, M (t) 41% NAR 5500, V(ad) 26%, A (ad) 17%, S (tad) 0.5%, M(t) 10%
Ex Stock Ex Stock Ex Stock Ex Stock Ex Stock Ex Stock Ex Stock
860.00 850.00 780.00 560.00 490.00 470.00 960.00 990.00
$ $ $ $ $ $ $ $
102.43 101.16 92.29 64.42 55.55 53.02 115.10 118.90
860.00 850.00 780.00 560.00 490.00 470.00 960.00 990.00
$ 102.43 $ 101.16 $ $ $ $ 92.29 64.42 55.55 53.02
$ $ $ $ $ $ $ $
$ 115.10 $ 118.90
NAR 6000, V(ad) 25%, A (ad) 15, S (tad) 0.6, M(t) 7.8% Ex Stock
Qinhuangdao Port - Imported Coal Prices Australia Russia Russia HCC PCI Coal Russia NAR 5500 NAR HCC PCI 5,500
HCC, A 9%, V 25%, S <0.6%, G 85 A 8%, V 15%, S 0.6%, NAR 5500, A 17%, V >25%, S < 1%,
6-Jun-11
Ex Warehouse 1,700.00 FOR
30-May-11 $ $ $ 208.85 151.84 97.36 1,700.00 1,250.00 820.00 $ 208.85 $ 151.84 $ 97.36 $ $ $ -
1,250.00 820.00
Ex Warehouse
China Domestic Coal prices FOB Qinhuangdao

1,000 900 800
Qinhuangdao Stockpile kt NAR 4,000 NAR 4,500 NAR 5,000 NAR 5,500 NAR 6,000
100 9,000 90 80 70 60 6,000 50 5,000 40 30 20
China Domestic Coastal Freight (RMB)
Guangzhou Stockpile kt Qin - Ningbo 15 - 20kt DWT Qin - SHanghai 20 - 30kt DWT Qin - Guangzhou 40 - 50kt DWT
3,500
8,000
3,000
7,000 700 600 500 400 300

1 0 -10 r-1 0 r-10 -1 0 -10 l-10 -10 -10 t-1 0 -10 -10 -11 -1 1 r-1 1 r-11 -1 1 -11 c y y v b b nn n n g p u c Ja -F e -Ma -Ap -Ma -Ju 4 -J -Au -Se -O -No -De -Ja -F e -Ma -Ap -Ma -Ju 4 4 44 4 4 4 4 4 4 4 4 4 4 4 4 4
2,500
2,000
4,000
3,000
1,500
The above data available from China Coal Resources ("CCR") - refer http://en.sxcoal.com. CCR was founded in 1988 and is the only commercial English website in China's coal and coke industry. CCR has more than 360 staff throughout China. CCR provides current news and related data, consulting services as well as facilitating investments and joint venture arrangements between foreign and domestic enterprises.
Page 5 of 32
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COAL MARKET NEWS Newcastle coal exports leap 31 percent Australia's coal exports from the eastern Newcastle port, which ships mostly thermal coal used in power plants, jumped 31 per cent in the week as demand increased. Exports rose to 2.569 million tonnes in the week to June 6, up from 1.955 million the previous week, Newcastle Port Corporation said on its website today. Japan, the largest importer of Australian coal, has seen coal purchasing decline since it was hit by a devastating earthquake and tsunami in early March, but is seen slowly returning to the market. Australia's thermal coal on the Newcastle index for the week to date was $118.43 per tonne on Tuesday, up 93 cents from $117.50 a week earlier, but down from $119.34 on Friday. The vessel queue at the port was up to 14 ships last week from 13, while the average waiting time for vessels at the port dropped to just over a day. Thirty-one ships were travelling to the port to load coal, down from twenty-two last week, the port said. The Hunter Valley Coal Chain Coordinator (HVCCC), which helps coordinate coal exports, put the number of vessels in the queue at the port at 22 by midnight on Tuesday. The HVCCC calculates the number of ships in the vessel queue using a wider radius from the port than the Newcastle Port Corporation. Source: Reuters Dalrymple bay terminal coal exports maintain rising trend in early June Australia's Dalrymple Bay coal terminal, which handled coal exports of more than 4 million mt in April and May, after a decline following a record spell of bad weather, is seeing the increased shipping activity continue this month, a terminal official said Thursday. "We are seeing an increase in ships arriving for which coal is available, and hopefully this is a long-term trend and a turning point," Dalrymple Bay coal terminal operations general manager, Greg Smith, said in a telephone interview. "We have quite a lot of coal moving to the terminal. Last week, the terminal took between 22 and 24 coal trains per day. I am not too sure how long this will last, hopefully it will be a long-term situation," he said. At midnight Australian Eastern Standard Time June 8, DBCT had 998,500 mt of coal on its stockpile and available for loading onto ships, according to the website of the Dalrymple Bay coal chain coordinator. The Queensland coal terminal has been steadily increasing its coal exports since they hit a monthly low of 2.65 million mt in February 2011. They hit 4.46 million in April, slipping slightly to 4.35 million mt in May, according to data posted on the NQBPC website. In the 11-month period ended May 2011, Dalrymple Bay coal terminal has so far exported 50.27 million mt of coal exports, compared with 57.2 million in the corresponding 11-month period to May 31 2010, according to data on the website of the terminal's port authority, North Queensland Bulk Ports Corp. Meanwhile, the terminal's offshore vessel queue has stayed below 20 ships since April and on June 8 DBCT had 18 ships in its vessel queue that were waiting to load coal. The terminal's vessel queue was in the low 40s last December. "The range we need to get the best productivity out of the coal supply chain is 15-20 ships," said Smith commenting on the terminal's optimal vessel queue. Having enough available coal to load on to arriving ships has been a pressing issue for the coal terminal for the past few months, as heavy rainfall earlier in the year has caused persistent production problems for many Bowen Basin coal miners. "Demand has always been there, but buyers of coal were not prepared to nominate ships for arrival at DBCT while mines were under force majeure," Smith said. "Now that these mines are out of force majeure, what appears to be happening is that the terminal is getting more ships arriving," he said. Approximately 20 coal mines ship their coal exports through Dalrymple Bay coal terminal including, Anglo American Metallurgical Coal, BHP Billiton-Mitsubishi Alliance, Macarthur Coal, Rio Tinto, Peabody Energy and Vale. Most of the Bowen Basin's coal producers are understood to have now lifted their remaining restrictions on coal exports resulting from wet weather. Anglo American Metallurgical Coal, however, declined to comment Thursday on the operational status of its German Creek coking coal mining complex in central Queensland, in spite of market speculation that it had recently lifted restrictions on its coal exports. BHP Billiton, the operator of nine Bowen Basin coal mines has restricted its operational updates to its quarterly production reports, the last of which on April 20 said: "Force majeure remains in place for the majority of our Bowen Basin products with production, sales and unit costs likely to be impacted, to some extent, for the remainder of the 2011 calendar year." Separately, Dalrymple Bay coal terminal has postponed some of its scheduled maintenance to enable its coal company customers to maximize their coal exports in the lead up to the end of the Australian financial year on June 30. "We have deliberately eased or delayed maintenance to give miners the chance to catch up on throughput, it being the last month of the financial year," Smith said. Source: Platts Spain Boosts Incentives to Coal, Gas Power Plants, Cinco Says Spain plans to increase incentives for utility companies operating coal and gas power plants, Cinco Dias reported, citing a draft of a regulation to be passed by the Industry Ministry. The power plants will get a total of 1.1 billion euros ($1.6 billion), an increase of 600 million euros, the newspaper said. Source: Bloomberg
Page 6 of 32
Grindrod plans expansions of its coal terminals As Richards Bay Coal Terminal (RBCT) creaks and groans with reduced coal volumes available for export, another coal terminal operator in South Africa and Mozambique, the Grindrod Group, says it intends expanding operations at Richards Bay and Maputo. The Grindrod terminals act as a safety valve for mines unable to crack the nut of becoming a favoured RBCT exporter, partly due to inadequate rail services by Transnet Freight Rail (TFR) but also because many emerging miners are simply unable to gain access to RBCT. According to Grindrod expansion of its operations is subject to the availability of rail capacity between the mines in South Africa and the two ports of Maputo and Richards Bay, where Grindrod has its coal terminals. The company has recently increased capacity at the Maputo Matola coal and magnetite terminal to between six and seven million tones, of which five million is for coal and two million for magnetite (an iron ore). Grindrod has been reported as saying it intends increasing the Matola terminal capacity to 20 million tonnes, which it hopes to have in service by the end of 2014. The Matola terminal is unable to compete on equal terms with RBCT on account of the limited draught in Maouto Bay, which prevents the use of Capesize vessels. However, the reduced cost of transporting coal to Maputo from the adjacent Mpumalanga mines provides the Mozambique port with its own advantage. We believe that the demand to move cargo through the coal terminal will continue to grow and we are gearing up to accommodate this increased demand for capacity from both established and junior miners. We look forward to continued interaction with TFR and CFM, building on our relationship with the Mozambican Government and working together with all stakeholders to optimise trade through the port of Maputo, Alan Olivier, Grindrods chief executive said last week. Grindrods terminal capacity at Richards Bay, which is distinct from the 91mt capacity RBCT, will see capacity more than double from 1.5 million tonnes a year to 3.2mt annually within months. Grindrod says it believes it is capable of increasing that capacity by another 10mt within a year of obtaining the required rail capacity. While Grindrods further expansion of its coal and iron ore activities remains largely dependent on improved rail services to be provided by TFR, it is ironic that the company owns and operates its own rail services which so far it has been unable to use commercially on TFR tracks. Source: Ports & Ships AEP to retire 6,000 MW of U.S. coal generation American Electric Power American electric Power, one of the country's largest coal-burning utilities, said on Thursday it plans to retire nearly one-quarter of its coal fleet and retrofit other units at a cost of as much as $8 billion to comply with proposed environmental regulations. To meet stricter pollution limits for air, water and coal waste, AEP said it will retire 6,000 megawatts of coal-fired generation in Virginia, West Virginia and Ohio in 2014. It also plans to upgrade or install new advanced emissions reduction equipment on another 10,100 MW, convert 1,070 MW of coal generation to 932 MW of natural gas capacity and build 1,220 MW of natural gas-fueled generation. The Columbus, Ohio-based company, which operates utilities in 11 states serving 5 million customers, warned that costs of the proposed regulations to customers and local economies have "been vastly underestimated," especially in Midwestern states that rely heavily on coal to produce electricity. "Because of the unrealistic compliance timelines in the EPA proposals, we will have to prematurely shut down nearly 25% of our current coal-fueled generating capacity, cut hundreds of good power plant jobs, and invest billions of dollars in capital to retire, retrofit and replace coal-fueled power plants." Said Michael Morris, AEP's chairman. Duke Energy, Dominion Resources (D.N), Progress Energy (PGN.N), the Tennessee Valley Authority and other utilities have already identified coal units they expect to retire in the next few years. Industry studies have indicated that between 30,000 and 70,000 MW of coal-fired generation in the U.S. may be forced to shut, depending on the final EPA rules. While supporting the environmental benefits of the regulations, Morris said AEP electric rates could jump from 10 percent to 35 percent as its utilities comply with the rules. AEP utilities currently own nearly 25,000 MW of coal-fueled generation, about 65 percent of AEP's 38,000-MW generating capacity. Coal's share would drop to 57 percent of AEP's total generating capacity by the end of the decade, the company said in a release. Morris also said electric reliability in the Midwest could be affected as utilities juggle the need to retire plants, shut others to install new pollution equipment and develop new gas generation. "The proposed timelines for compliance aren't adequate for construction of significant retrofits or replacement generation so many coal-fueled plants would be prematurely retired or idled in just a few years," Morris said. Morris said the company will work with the EPA "with the hope that the agency will recognize the cumulative impact of the proposed rules and develop a more reasonable compliance schedule." "With more time and flexibility, we will get to the same level of emission reductions, but it will cost our customers less," Morris said. "You could save billions in capital costs if you had until 2020 for compliance as opposed to the timeline in the proposed rules because you can stagger the work, you won't have to idle plants or buy power on the market." said AEP spokeswomanMelissa McHenry. However, several EPA deadlines have been set by federal courts and are beyond the EPA's control, said Mark Griffith, a managing director of Black & Veatch, a global consulting, engineering and construction company, "Asset owners have been aware of this for several years and have been making plans," Griffith said. "This can be done," he said. "It's a matter of spending money and managing the process. It's not simple and it's a lot of changes in the generation infrastructure in a relatively short period of time." Source: Reuters
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Colombia keeps coal output target despite heavy rains Colombia is keeping its coal production target for the year despite heavy rains that have lashed the country and could have hampered production, Mining Minister Carlos Rodado said. Rodado expects that coal production figures for 2011 will reach 85 million tons to 90 million tons. The figure is higher than the 76 million tons produced in 2010, missing the government's target of 80 million. Heavy rains in 2010 reduced production in Colombia, which relies on large open-pit coal mines for most of its output. The heavy rains have continued this year and Rodado admitted that all economic sectors, including oil and mining, have been affected by the downpours. "We have to wait and see how the rains affect us" in the second half of the year, Rodado added. The mining minister also said that oil production and pipelines have been damaged by the remains. Colombia ranks as one of the world's top coal producers, with firms such as BHP Billiton PLC and Glencore International AG's controlling some of the country's most important mines. Source: Fox business Colombia passes plan to distribute coal,oil tax revenue Colombias Congress passed a law to modify distribution of taxes on commodities to allow a greater swathe of the nation to benefit from rising revenue. The law enables provinces that dont produce oil and coal to receive more funding for investments, Finance Minister Juan Carlos Echeverry told reporters today in Bogota. Colombian President Juan Manuel Santos said after taking office last year that the change will help the government finance construction of roads, ports and technology projects and accumulate savings. Colombia is South Americas largest producer of coal and its third-largest supplier of oil. The government will earmark 10 percent of the tax revenue for technology and innovation projects, Santos said in May. Government inroads against guerrilla groups have improved security in the Andean nation, luring investors including billionaires Eike Batista and Carlos Slim, whose Grupo Carso SAB stepped into Colombian oil exploration this year. Colombia may produce 1.7 million barrels of crude and natural gas a day in 2020, closing in on Brazil, South Americas second-largest producer after Venezuela, Energy and Mines Minister Carlos Rodado said in an interview in April. Source: Bloomberg Euro Coal-Jly S.African trades at API4 minus $3/T Lack of demand for prompt South African spot coal is finally starting to be reflected in physical prices, traders and utilities said on Thursday. Coal swaps held firm, however, bolstered by strong oil prices. Swaps have helped prop up physical values despite daily weakening fundamentals. This has been most noticeable in the increased number of trades at deepening discounts to the API4 index, most recently a trade on Thursday for a July cargo at $3.00 below index, sold by a utility to a trader. On Wednesday, prompt South African prices had fallen to $1.50 below index. South African prices have hovered either side of $120.00 a tonne for the past few months, a price plus freight which has been uncompetitive and has prompted Indian, South Korean and European buyers to seek coal from other origins. "South African is the unwanted problem child of the coal market today," one trader said. "There's a lot of coal around in Europe, and nobody anywhere wants South African coal at these prices. Whoever bought the July cargo at $3.00 under index was probably only covering an existing short position; it doesn't reflect real demand," a major utility source said. The increasing discounts to the index were an attempt by sellers to move coal, which was proving tough to sell at $118-120. South African prices are going to have to fall closer to $110 before fresh buying emerges from India, which has steered clear of South African coal for several months, or China, which is evaluating South African versus Australian, Russian and U.S. delivered prices. Chinese end-users have in the past week bought a few standard Russian coal cargoes of 6,000 kc/kg quality at prices of up to $134 a tonne delivered [ID:nLDE75818M]. This high-grade coal is likely to be blended with the substantial low-energy sub-bituminous imports already bought from Indonesia by Chinese power plants, traders said. "It makes sense for Russian to be one of the cheapest good quality coals to be sold into China, because the freight is so low but the quantity is small. It's a drop in the ocean. Everybody's got too much coal," another utility source said.Fixed-price South African cargoes have yet to trade sharply lower, although downward pressure is increasing, but bid levels did fall steeply on Thursday to $112-$115.00 a tonne, a drop of $3-5. Offers remained firm at close to $120.00 a tonne. Active bidding and offering by one major utility in both the DES and Richards Bay markets has been a pricesupporting factor for many months but is increasing the disconnect between weak fundamentals and visible fixed prices for physical material, traders, brokers and utilities said. A July loading South African cargo traded at $3.00 below the API4 index. An August South African cargo traded early on Thursday at $1.45 below API4. A September South African cargo traded at $1.15 below API4 via brokers. A September South African cargo traded at $121.25. A June delivery DES ARA cargo traded at $122.50, little changed. A June South African cargo was bid at $112.00 with no offer against it. A July South African cargo was bid at $115.50 and offered at $119.75. An August loading South African cargo was offered at $120.95, down $1.00. A July DES cargo was both bid and offered at $125.00 a tonne, up $2.00. Source: Reuters
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COAL Market seeks clearer direction While coal market fundamentals remain bullish, a strengthening US dollar and limited demand are pressuring prices. The front quarter API 2 contract last traded at USD 126/t, USD 2.75 higher than at Fridays close, while the Cal 12 contract has gained USD 1.75 this week, last changing hands at USD 130.50/t, according to one broker. Theres not much spare margin at the moment, said one Geneva-based coal trader, adding any slight disruption to supply could cause a spike. Theres continued buying from German utilities, said a London-based coal trader, adding higher prices for associated commodities are also supportive for coal. The whole energy sector is strong, he added. Nevertheless, bearish currency factors are helping to provide a ceiling. The dollar was last seen at 1.4606 against the euro 0.4% stronger than Tuesdays close after weakening since the beginning of the third decade of May. The dollar hasnt moved massively, but it will [play a role], said the Geneva-based trader, noting it is unlikely the API 2 Cal 12 contract will breach USD 131/t. And although there is some physical purchasing going on in Europe, the deals are mainly focused further along the curve, players said. To be honest, Im not seeing much actual physical demand for this summer at the moment, said a Finnish coal trader. I think the buyers are looking further into the future, he added. On the physical market, a June stem for delivery in Europe traded in the current session at USD 122.50/t USD 2/t below the paper market on the Global Coal screen. China is the place where people say demand should come at this stage, the Finnish trader said. If China starts buying, the [third quarter API 2] will definitely gain more, added the London trader. Source: Montel European Coal Derivatives Rise, Nearing Highest Close in a Month European coal derivatives rose for the third time this week in London trading. Coal for delivery to Amsterdam, Rotterdam or Antwerp with settlement next year added 25 cents, or 0.2 percent, to $130.50 a metric ton by 12:25 p.m. in London. A close of $131 on June 7 was the highest in more than a month. The contract has risen 21 percent in the past year. Profit from running coal-fired power plants for the next month, the so-called clean-dark spread, is about 6.37 euros ($9.29) a megawatt-hour, compared with 2.64 euros from burning natural gas, Bloomberg data showed. The calculation uses electricity prices in Germany, Europes biggest energy consumer, and takes emission costs into account. December carbon-dioxide permits under the European Union cap-andtrade system were 0.1 percent higher at 16.53 euros a ton. Gas for delivery in the six months through September 2012 to the U.K., Europes biggest consumer of the fuel, was little changed at 66.15 pence ($1.09) a therm in London. Source: Bloomberg Merkel calls for 10-20 GW new power plant capacity Germany will need fossil-fuel power plants for the transitory period into a renewable-based future, and as such will require additional coal and gas-fired generation capacity, chancellor Angela Merkel told parliament on Thursday. An additional 10 GW to 20 GW will have to be built in the coming years, Merkel said when presenting the governments energy legislation package consisting of eight laws and decrees. These include a revised nuclear act, which fixes an exit from nuclear power generation by 2022, as well as an amendment to the countrys renewable energies act . The main focus of the latter will be the expansion of wind energy on land and at sea, Merkel said. In addition, the EEG amendment also introduces an optional market premium model, aimed at incentivising a more market-based approach to renewable energy generation, she added. In the long term, we want to cut the costs for renewable energies support considerably, the chancellor said. The market premium has already drawn both protest and support from industry groups (see related story). SPD demands EEG changes. Meanwhile, the parliamentary leader of main opposition party the Social Democrats (SPD), Frank-Walter Steinmeier, said in parliament on Thursday that his party would not oppose the nuclear act. However, the SPD will seek changes to the EEG proposal, particularly in the field of onshore wind energy, which was not currently given the chance to reach its full potential, he added. In the EEG proposal, the government has increased subsidy cuts for onshore wind power by 0.5% from 1 January 2012, to 1.5% annually, while increasing offshore wind subsidies. On Wednesday, the head of German energy industry group BDEW, Hildegard Mller, told a parliament committee that net German fossil-fuelled power plant new build could be as low as 5 GW by 2016. Source: Montel Czech Coal Eyes Higher Prices in New Deals, Hospodarske Reports Czech Coal AS, a mining company, plans to raise prices of brown coal in new contracts with heating companies, Hospodarske Noviny reported, citing company spokeswoman Gabriela Benesova. Brown coal may cost about 70 koruna ($4) per gigajoule, compared with current price of 40 koruna to 45 koruna. Energeticky a Prumyslovy Holding AS, a company that manages several heating companies in the country, said more expensive coal would boost the cost of heating, Hospodarske reported. Source: Bloomberg
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JSW, Top EU Coking-Coal Producer, Sets Schedule in Largest 2011 Polish IPO Poland expects to raise 5.25 billion zloty from the initial public offering of coal producer Jastrzebska Spolka Weglowa SA, according to Bloomberg . Individual investors in Polands biggest IPO this year will be allowed to bid for a maximum of 75 shares in the European Unions largest coking-coal producer, known as JSW, according to its prospectus. Sale procedures elsewhere on the companys website said individuals may buy about 10,000 zloty of shares each, which implies a price of about 133 zloty for each of the 39.5 million shares being offered. The Treasury Ministry is seeking to raise 15 billion zloty from asset sales this year to help finance the budget deficit and curb debt. Poland sold 12 percent of Bank Gospodarki Zywnosciowej SA last month and is offering 10 percent of its biggest insurer PZU SA today. Were starting one of the biggest IPOs in Europe this year and weve already received very positive feedback from investors, Minister Aleksander Grad said at a news conference in Warsaw today. He declined to comment on the calculations by Bloomberg News. JSWs maximum price will be announced on June 13, with final pricing on June 28, according to the prospectus. The government and JSW pledged not to sell shares for 360 days after the IPO. Poland, whose sole stock exchange is central Europes fastest-growing equity market, has had 84 IPOs so far this year, attracting more companies than all of western Europe and ranking second after China among emerging markets, according to data compiled by Bloomberg. Brokerages helping manage the sale value JSW at 13 billion zloty or more, a person who had seen research from four of the nine underwriters said on May 31. JSW will be the biggest coal producer listed in Warsaw when its stock starts trading on July 6, with a market value set to exceed New World Resources NV (NWR) of the Czech Republic, Polands Lubelski Wegiel Bogdanka SA (LWB), and Ukraines Sadovaya Group SA. Goldman Sachs Group Inc., JPMorgan Chase & Co., Citigroup Inc. and UniCredit SpA are joint global coordinators and joint bookrunners for the sale. PKO Bank Polski SA, Ipopema Securities SA, Societe Generale SA, BRE Bank SA and Wood & Co. also help manage the IPO. Source: Bloomberg Endocoal to raise A$14.9M for projects Bowen Basin coal developer Endocoal has raised A$6.9M through a placement with institutional investors and plans to raise a further $8M via a share purchase plan. The institutional placement was significantly oversubscribed with strong support from overseas institutional investors, Endocoal CEO Tim Hedley said. The share purchase plan offer will close on July 6. The expected $14.9M to be raised from the placement and share purchase plan will be used to fast track exploration of the Rockwood PCI project and mine development at Orion Downs, 60km south east of Emerald. Source: coalportal.com Australia exports of coal and iron ore Jan-Apr 2011 Australias exports of coal and iron ore in the first third of the year have been more resilient to the various disruptions (floods in Queensland on the coal supply side and, on the coal and iron ore demand side, the earthquake in Japan) than at first thought possible. In fact for coal the past the past two months have seen a steady recovery from the low point of February when just 17.3 Mt were exported and the impact of the floods was at its peak. Subsequently shipments reached 20.7 Mt in March and now 22.0 Mt in April however the exporters are still some distance from the monthly average seen last year of 25.0 Mt. On the iron ore side and after the 25.8 Mt low of February exports recovered strongly to 35.9 Mt in March the third largest volume on record and have followed that up in April with a substantial 34.1 Mt. So by all accounts iron ore appears firmly back on track while coal might be expected to recover fully over the next two/three months and this, in turn, should contribute positively to underlying dry bulk demand particularly for Cape and Panamax tonnage. Source: ICAP Shipping QRC calls on government to get mines back into swing The Queensland Resources Council has added their voice to the growing chorus of industry players urging the government to release flood waters hampering coal mine operations. Stymied by the Environment Department mines are being forced to pump water around temporary storage sites because they cant get permission to release it off site. Before the wet season, Queensland's coal industry was set to export at least a record 200Mt or more in 2010-11, but that will likely fall 40Mt short, costing Queensland coal exports of $7B, the QRC said. Coal exports in May were 23% below last year's level and were the lowest month of May export tally for at least five years. Source: coalportal.com Jindal extends Rocklands offer period Indian conglomerate Jindal Steel & Power has extended the offer period for its on-market takeover bid for Queensland coking coal developer Rocklands Richfield by a further two weeks. The offer period will now close at 4pm Brisbane time on Tuesday, July 5. Jindal has made an unconditional cash offer of A$0.30 per share for all the shares of Rocklands not already held by itself or its associates. Source: coalportal.com
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Coal producers to push for third party participation in unviable mines Domestic coal miners such as Coal India Ltd (CIL) and Singareni Collieries Co Ltd are trying to include in the Working Group report on Coal for the Twelfth Plan a proposal to exploit their unviable underground coal mines through private participation on a coal-sharing basis. The coal miners had earlier put forth this proposal to the Government, but it did not get the approval, as any coal sharing formula between the miners and a third party would be treated as deemed coal linkages and, therefore, fall outside the Government's coal distribution policy. The Working Group, which is slated to submit its draft report by December, is likely to include the proposal in its report, possibly with some modifications to the original proposal, sources said. Mr S. Narsing Rao, Chairman and Managing Director of SCCL, who is also a member on the Working Group, did not want to comment on the issue, but agreed that opening up unviable mines through third party participation could be an effective way to increase India's production from underground sources. The proposal was mooted by the coal producers with the objective of opening up unviable mines, mostly underground, across the country. It is expected to get a positive response from power producers, who could take up such projects and, thereby, get assured supplies of the raw material at lower prices. CIL's production from underground resources, for instance, has fallen from 75 million tonnes in 1975 to about 40 mt today a decrease of almost one mt every year for the last 36 years. SCCL's underground production is 12 mt, which can at best be increased to 15.5 mt in the next five years. SCCL takes up mines that provide an IRR of 12 per cent at 85 per cent yield levels its current cost of production is about Rs 1,400 a tonne, while its aggregate realisation last fiscal was about Rs 1,610 a tonne. Project that involve an IRR below this level are bracketed under unviable mines. Such projects could be made viable by third party investors, including power producers, through improved productivity and technology. For instance, SCCL's wage costs work out to about 44 per cent of cost of its products, which private operators could scale down to improve productivity. Source: The Hindu Business Line Indika aims to produce 31 million tons of coal in 2011 PT Indika Energy Tbk, an integrated energy company, is targeting to increase its coal production up to 31 million tons this year from 29.1 million tons in 2010, says an executive. Indika president director Arsjad Rasjid said by looking at the first quarters production of 7.6 million tons worth US$62.5 per ton, he was upbeat that the company could reach the target by year end. In the first quarter we can reach around 24.6 percent of this years target, so we are very optimistic we can achieve the target, Arsjad said at the companys public expose on Wednesday. He said that 80 percent of the 31 million tons was already ordered under contracts, while the remaining 20 percent would be sold on the spot. Arsjad added that 70 percent of the total production would be exported to various countries such as India, China and Korea, while the remaining 30 percent would be sold in the domestic market. The Indonesian Coal Mining Association (APBI) said Indonesian coal miners expected to produce 340 million tons this year, an increase of 23 percent from 275 million tons in 2009. Twenty percent of that amount around 70 million tons will be allocated to fulfill domestic demand, while the remaining 80 percent will be exported. Indika Energy director Azis Armand said the company had 651 million tons of proven coal reserves and 1.4 billion tons of potential coal reserves. The proven reserves have been recognized in four or five areas and we will acquire more areas to increase the proven reserves, said Arsjad, adding Indika planned to increase its production capacity up to 50 million tons in 2012. Indika Energy puts its strategic investments in the areas of energy resources, energy services, energy infrastructure, contract mining, coal transport and logistics, and power generation. The company posted Rp 772.7 billion ($90.5 million) in net profits in 2010, a 6.5 percent increase from Rp 726 billion in 2009. The growing profit resulted from a total revenue of Rp 3.7 trillion, up 51.4 percent from 2009s Rp 2.4 trillion, according to data released Wednesday. The company will pay dividends of about Rp 385.3 billion or about 50 percent of last years profit, Azis said. He added that the company had declared final dividends payment of Rp 135.4 billion or Rp 26 per share, together with Rp 249.9 billion interim dividends paid in November 2010. Source: The Jakarta Post Chamber objects to Eskom, Transnet changes SOUTH Africas Chamber of Mines (COM) said on Thursday it was deeply concerned about the removal of electricity parastatal Eskoms chairperson, as well as suggestions that Transnets chair was also on his way out. Government named Zola Tsotsi as the new chairperson of power utility Eskom, a cabinet statement said on Thursday. Tsotsi, the former chairperson of the Lesotho Electricity Corporation, will replace Mpho Makwana, who became chairperson after a leadership crisis at Eskom in late 2009. Cabinet spokesperson Jimmy Manyi said the move to replace Makwana was not a reflection on his work, but rather part of the government's bigger strategy to change the way state-owned companies are run. "It was done within the broad principles of renewing the board, bringing new thinking and new strategies in," Manyi said. He said the government was also looking at restructuring the board of state-owned freight logistics Transnet, responsible for transporting coal and iron ore from mines to export terminals at the coast. This could include the removal of chairperson Mafika Mkwanazi. "There is a possibility that vacancies will be filled at the Transnet annual general meeting later this month and new blood introduced," he said.
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CEO of the COM Bheki Sibiya said he was surprised by the board shuffles. He said that while the COM and its members acknowledged the fact that the matter was an internal one between the shareholders of the two state owned enterprises and their officials, it would be a dereliction of duty on our part, as major stakeholders in these organisations, to remain silent on this issue given its potential impact on our industry. It has been our considered view that stability and efficiencies in these two enterprises are critical in ensuring a competitive and growing mining industry which is important to the economy of the country. During the short period in which Mr Mafika Mkwanazi and Mr Mpho Makwana have occupied their respectively strategic positions, they have managed to bring stability to their respective organisations which, to our vantage point, seemed to be in turbulence. We therefore do not understand the logic behind their removal from office. Sibiya said he would approach Public Enterprises Minister Malusi Gigaba to try and understand the logic behind these developments. Source: miningmx Waterberg coal offtake deal set to last 38 years Price of each shipment will be based on the international market price at the time RESOURCE Generation, whose shares have yet to trade since it made its secondary listing on the JSE last year, yesterday announced a revision to its coal supply deal with a subsidiary of Indian company RPG Group, extending the life of the deal by 18 years. The Indian company will now buy 139-million tons of thermal coal from the companys Boikarabelo mine in the Waterberg region of Limpopo in a deal that will take place over 38 years, Resource Generation said. The Sydney-based company said CESC, a unit of RPG, was beginning a feasibility study about building "a 2x660MW coal-fired power station" adjacent to the mine to supply power to the local grid. The proposed station will use about half the additional product domestically, with the rest for the export market, it said. "The price of each shipment will be based on the international market price at the time," Resource Generation said. A Citigroup Global Markets report released at the end of March warned that as China had big coal resources, there was always a risk that it could raise output and become a net exporter of the fuel, having a depressing effect on coal price. Initially, Resource Generation had signed an offtake agreement with the RPG unit for 37million tons over 20 years. The initial offtake in the deal has increased to 73-million, and will start when the Boikarabelo mine starts production in 2013. The balance of the additional offtake of 66-million tons will begin after the mines second stage of expansion. Since its secondary listing in Johannesburg last July, Resource Generation has not traded on the JSE. On the Australian bourse, the company has a market capitalisation of AS$200m (R1,4bn). Compared to coal assets in Mpumalanga, the Waterberg region is not well served by infrastructure such as rail to export coal. The company said in its Stock Exchange News Service announcement yesterday that it was engaged in talks with Transnet and Eskom over long-term coal supply agreements. Source: Business Day SAs coal industry in a strong position but also grappling with major challenges SACPS head Incoming South African Coal Processing Society (SACPS) chairperson Mark Cresswell has said the coal industry is in a strong position but faces significant challenges. Speaking at the societys yearly awards evening, in May, he referred to the gradual renewal of the Witbank-Highveld coalfield, which supplies coal for 80% of State-owned power utility Eskoms power output. Most power stations do not wash their coal. However, as they near the end of their initially contracted 40-year life of reserves, a relatively easy solution for extending these reserves is to start washing some of the coal, [and improve the quality of the coal], which he believes is good news for the industry. He said the construction of the Medupi and Kusile power stations, which would have washing plants and add significant capacity to Eskoms reserves, also presented opportunities for the industry. Medupi is focusing attention on the Waterberg and the surrounding coalfields as the next major source of thermal and coking coal; and there were many studies under way in the region, which might result in key future projects. The environmental sector also posed challenges for the industry, particularly regarding the necessity of saving water and avoiding acid mine drainage. Saving water in the processing plants has always been possible by the use of slimes filters; and it is encouraging to note that there are quite a few plants in full operation in the Witbank area which are routinely reducing water consumption by up to 75%, down to about 45 /t, Cresswell said. Referring to talk of nationalising the industry, he said its current healthy state was largely a result of its intensively competitive nature. Although large mining houses were still significant players, Eskom now sourced over 20% of its coal from smaller, independent mines, he said. Cresswell said the CoalTech 2020 Research Programme was still going strong and the SACPS would shortly be sponsoring a PhD student in coal-related research, financed by the sponsorship money raised at its biannual conference. Coal-processing project house Taggert Jim Harrison Design Associates Jim Harrison was named Coal Man of the Year at the awards evening in May.The award is presented to those who have made significant contributions to the coal-preparation industry over an extended period. The Student of the Year award went to Melanie Visser for her role in the advanced coal preparation course at Witbanks Colliery Training College. This award is given to two long-standing members of the society, retired from the committee but not from active work in the industry. Honorary SACPS life memberships were awarded to Amec consultant Dave Tudor and former Isandla Coal Consulting MD Peter Hand, both former chairpersons of the society. Source: Mining Weekly
Riversdale takes delivery of six locomotives as it moves towards completing Moz coal project Australian coal-mining company Riversdale Mining has taken another step towards completing the massive Benga coal project, in Mozambique. he company received the first of six diesel locomotives earlier this month. It contracted US-based company National Railway Equip- ment and its European subcontractor, TV Gredlelj, of Zagreb, Croatia, to deliver the locomotives. These newly built EMD GT26CW hood unit locomotives are equipped with 1 067 mm bogies, driven by 3 300 hp engines and will be transporting coal from Benga along the Sena railroad, which links the Moatize mining region to the Port of Beira. There is an option for a further five more similar locomotives for Riversdale. Meanwhile, the company is currently working on the first phase of the project, estimated to cost about $270-million. The project will be developed in three principal stages, contemplated to align with the completion and subsequent expansion of rail, port and river barging infrastructure in Mozambique. The initial stage-one development, at 5,3-million run-of-mine (ROM) tons a year, will produce about 1,7-million tons a year of high-quality hard coking coal and 300 000 t/y of export thermal coal. Riversdale Mining says in its quarterly activities report for March 31, 2011, that the mining contractor for stage one of the project continues to assemble and commission various equipment components. Overburden removal has started in the south pit and coal exposure is currently in full operation, with 1,8-million cubic metres of overburden already cleared and 920 000 t of coal exposed. Civil works at the mining facilities have also started and the mine offices are currently under construction. The construction of the conveyor and secondary haul road has been completed and construction of the conveyor structure is already in progress. Meanwhile, the design for the overland conveyors and the ROM station was completed in late January 2011. Construction works started during the quarter and are advancing. The licence approval for the building of the waste dump runoff is still outstanding. Further, bush clearing on the rail siding haul road has been completed and the earthworks are 27% complete. Works at the Matambo substation have been finalised and the line construction has reached the Zambezi river bank, with the laying of the foundations for the 66-kV-line poles on the river islands having started. he construction licence for the rail siding and haul road has been obtained and the associated works are in progress. The order for the rail track construction has been placed and the bulk of the materials has been supplied, with construction expected to have started by the end of May. The stage-two expansion will include the installation of a second module of the coal handling and preparation plant and increase ROM production to 10,6-million tons a year, boosting output to 3,3-million tons a year of high- quality hard coking coal, and two-million tons a year of export thermal coal. First coal is expected to be available for export at the Port of Beira before the end of 2011. The final stage is expected to increase coal production to about 20-million ROM tons a year, through the installation of two additional coal preparation plant modules. This will depend on, besides other things, future coal market conditions and the availability of port, rail and barging capacity at the time. Source: Mining Weekly South Korea eyes Indonesia coal to close cost gap South Korea, the worlds third-largest thermal coal buyer after Japan and China, could increase Indonesian coal use to more than half of imports in a bid to cut costs at loss-making state utility Korea Electric Power Corporation (Kepco). Kepco, which manages the transmission and distribution network, lost 61.4 billion Korean won ($57 million) in 2010 and is struggling to plug the gap in a tariff review due this month, although political pressures and rising inflation mean it is unlikely to be able to claw back all its losses. The firms tariffs were 90.2 per cent of its costs last year, according to its data. It buys power at the Korea Power Exchange, mostly from its six fully-owned generating firms whose combined power output accounts for 92 per cent of the countrys total. Of the six power generators, five have thermal plants fed with imported coal, while the other generates power via nuclear and hydro. Kepco chooses power from the one with the lowest fuel costs, meaning price-competitive fuel mixing is critical in increasing their revenue. Generating companies are doing their best to improve the blending ratio of low calorific value Indonesian coal in order to take advantage of the relatively cheaper price, said Jason Jang, head of fuel procurement at Korea East-West Power (EWP), one of Kepcos power generating firms. Korean generating companies are so sensitive to price that we have made a huge effort to lower coal specifications to save on costs. Kepcos total fuel costs are 18.6 trillion won annually, with coal accounting for 43 per cent, liquefied natural gas (LNG) 43 per cent, oil 9 per cent and nuclear the remainder, the company data on its consolidated earning results showed. Coal prices surged nearly 30 per cent since last December in the wake of floods in Australia and rising global demand, before easing back given a lack of Japanese spot demand. The GlobalCoal Daily Index on Thursday showed that Australian coal from Newcastle was at $119.03 per tonne, DES ARA European coal at $123.45 and RB South African coal at $119.93 on a free-on-board (FOB) basis for a heating value of 6,000 kcal/kg. Traders said Indonesian coal was at $108-$109, FOB, for the same heating value. Even with freight added, final prices of Indonesian coal are still about $10 a tonne lower than other origins, they said. Shipping costs (of Indonesian coal) are not so burdensome thanks to a short distance, and as it is low calorific, its price has a discount, said a Korean utility source who could not be named due to the sensitivity of discussing contract prices for coal. Source: Reuters
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China miners, Japan utilities may settle coal price at US$145/T China's top coal miners and Japanese utilities may settle term price at US$145 per tonne for thermal coal contracts to be delivered in next fiscal year starting from Apr, reported the 21st Century Business Herald, citing one top coal official. Talks on next year's term contracts, which had been delayed by the massive earthquake and tsunami that hit Japan in Mar, may finalize in the end of Jun or early Jul, with price settling at some US$15/t higher than the Japan-Australia settlements, the report cited an unnamed top coal official as said. On Apr 15, Australian coal miners reached agreement with Japanese utilities at US$129.85/t for thermal coal supplies during the next fiscal year. Top Chinese coal producers led by Shenhua Group and China National Coal took part in negotiations with 11 Japanese utilities represented by Tokyo Electric Power. Source: en.sxcoal.com Shandong coal miners hike coking coal price Main coal companies in East Chinas Shandong province raised the price of coking coal by 20-30 yuan/t recently, as the provincial government limited deliveries of other coal types to prioritize coal transport to power plants amid power crunch. Currently, the ex-works price of 1/3 coking coal in Zaozhuang is 1410 yuan/t and that of gas coal in Linyi at 1170 yuan/t, both inclusive of VAT, showed data released by China Coal Resource (en.sxcoal.com). Yankuang Group hiked the price for washed coking coal by 30 yuan/t to 1170 yuan/t, local media reported recently. Source: en.sxcoal.com Coking coal softens at China ports The domestic coking coal market witnessed a weakening in the past few weeks as mills expected demand to shrink during this summer. Jingtang, the major north China port that handles both domestic and imported coking coal, saw prices down RMB5/ t in the week ended May 30, with imported premiums traded at RMB1675-1705/t, while domestic materials at RMB1675-1695/ t. At producing regions, Liulin no. 4 coking coal, a premium brand in Shanxi, was priced at RMB1,650/t FOB railcar on June 6, declining RMB30/t from a month ago, although other products were stagnated. Coking coal imports remained weak at Jingtang in the said period, with 119,913 tonnes arrived, dropping 4,866t or 3.89% from last week. Source: China Coal Times Gansu energy-using cos to get 14 mln T coal from Xinjiang Northwestern Chinas autonomous region of Xinjiang will deliver 14 million tonnes coal to Gansus energyconsuming companies to ensure electricity supply, 60%-70% of which is for power plants, reported Xinhua news agency, citing Gausu Industry and Information Commission. Coal-fired power plants in Gansu consumed a total of 26.62 million tonnes coal in the first five months this year, up by 22% from the same period last year, said Yang Guagnwen, director of transport and logistics department under the commission. The regions coal miners would delivered 20 million tonnes coal to power generators in Gansu this year, expected the commission. Gansus key coal-consuming companies has singed 2011 supply contract with the regions main coal producers. Source: en.sxcoal.com Huanghua coal shipment up in May Huanghua, Chinas second largest coal loading port owned by Shenhua, delivered 7.9mt in May, which was an increase of 0.1mt from April, although unchanged from May last year. Its YTD handling saw a rise of 6.7mt to 40.5mt, announced the port June 9. Coal railings to the port was 8.4mt in May, declining 0.1mt from the previous month, but rising 0.2mt from the same month of 2010, with the total for the first five months at 43.1mt, climbing 6mt year on year. Loading capacity of Huanghua is expected to reach 110mt/yr this year, and will further climb to 150mt/yr by 2015, according to plans. The port shipped 90mt in 2010, up 15% from 78mt in 2009. Source: China Coal Times Weekly CR China Thermal Coal Price Index Analysis and Forecast
CR China Thermal Coal Index
350
Pri ce Index
300 250 200 150 100 50 0 15-Jun-05
Stock Index Market Bal ance Index
15-Apr-06
15-Feb-07
15-Dec-07
15-Oct-08
15-Aug-09
15-Jun-10
15-Apr-11
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Price index As of Jun 6, the CR China Thermal Coal Price Index (CRTP) went up to 222.314 points, an increase of 2.207 points or 1% from the week before, and the CR China Thermal Coal Stock Index (CRTS) rose to 185.181 points, up 0.972 point or 0.53% from the previous week. The CR Qinhuangdao Thermal Coal Price Index or CR (QHD) was 845 yuan/t, rising 5 yuan/t from the week before and the CR Guangzhou Imported Thermal Coal Price Index or CR (GZ) stayed at 646 yuan/t, unchanged from one week earlier.
CR China Thermal Coal Price Index and Forecast Range
240
Pri ce Index
220 200 180 160 140
Lower l imi t Upper l imi t Long-term trend
120 8-Dec-08 9-Mar-09
15-Jun09
14-Sep09
21-Dec09
29-Mar10
28-Jun10
27-Sep- 3-Jan-11 4-Apr-11 10
2. Price Main sample areas The price of thermal coal at Qinhuangdao Port continued to rise in the period from May 30 to Jun 5 (this period). The VAT-included ceiling FOB price of thermal coal with calorific value of 6000 kcal/kg, 5500 kcal/kg, 5000 kcal/kg and 4500 kcal/kg rose to 890 yuan/t, 845 yuan/t, 750 yuan/t and 655 yuan/t respectively, up 10 yuan/t, 5 yuan/t, 10 yuan/t and 15 yuan/t from one week ago. And, in the production area of Datong, the freeon-rail price of thermal coal with calorific value of 5500 kcal/kg was 685 yuan/t, inclusive of VAT, unchanged from the previous week. In power plants along the Yangtze River in East China, the purchase price of thermal coal rose by 5-20 yuan/t from one week ago. Other main areas Thermal coal price in some areas edged up this period. The mine-mouth price of Tengzhou thermal coal (5500 kcal/kg) and Chongqing thermal coal (4500 kcal/kg) rose to 760 yuan/t and 510 yuan/t, up 40 yuan/t and 50 yuan/t from the week before. In transferring places, Jingtang port saw price hike in thermal coal with certain calorific value. The FOBt price of thermal coal with calorific value of 5800 kcal/kg, 5500 kcal/kg and 4500 kcal/kg increased to 890 yuan/t, 840 yuan/t and 640 yuan/t respectively, all up 5 yuan/t from one week ago. While that of 5000 kcal/kg stayed at 740 yuan/t, unchanged from the week before. The price of imported thermal coal with various calorific values in Guangzhou port remained the same as that in one week earlier. 3. Stock: In the production place, Datong Coal Mine Group had 4.95 million tonnes of coal in stock as of Jun 3, down 249,000 tonnes from the previous week. Ports saw ups and downs in their coal stocks. As of Jun 3, thermal coal stockpiled at Qinhuangdao increased to 5.79 million tonnes, up 31,000 tonnes from one week earlier. While, coal stocks at Guangzhou Port declined to 2.42 million tonnes, down 38,000 tonnes from the previous week. Coal stockpiled at the power plants of Chinas top six power groups and some local power generators in Shanxi edged up to 10 million tonnes on Jun 3, up 582,600 tonnes from one week before. 4. Price forecast (Jun 6-Jun 12)
CR China The rma l Coa l Price a nd Stock Inde x Tre nd
220 210 200 190 180 170 168.325 160 150 07-Jun-10 170 160 07-Jun-11 198.698 191.084 176.649 202.569 207.110 223.750 230 220 210 200 190 180
07-Aug-10
07-Oct-10
Stock Index
07-Dec-10
07-Feb-11
07-Apr-11
Pri ce Index
As showed the above zoom-in chart of the recent thermal coal price and stock index, the CRTS kept rising this period, but at a slower pace. The CRTP continued to climb, reflecting the general rise in thermal coal price. The CR China Thermal Coal Market Balance Index (CRTB) was 120.052 points this period, up 0.564 point or 0.47% from one week before. As of Jun 4, coal stocks at Qinhuangdao port climed to over 6 million tonnes due to navigation closure, but fell to 5.5 million tonnes on Jun 6 when transportation got normal, which indicated a strong demand for the fuel. Coal inventories at power plants belonging to six major power groups still maintained at high level with about 16 days of consumption.
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China would enter the peak demand season for power starting from Jun. According to estimates by relevant agencies, the highest power demand this summer may rise by 14% on year. The latest freight for vessels from Qinhuangdao to Shanghai stayed at 53 yuan/t from the previous week. And, that from Qinhuangdao to Guangzhou decreased to 82 yuan/t, down 3 yuan/t from the week before. The National Development and Reform Commission (NDRC) is expected to further strengthen its supervision on coal price and launch inspection campaigns in main production provinces regarding coal price. Meanwhile, NDRC have ordered large coal producers to take the lead in stabilizing power coal price. On the whole, thermal coal price would likely continue to go up next period, but at a slower pace considering stock levels and demand for the fuel. By the moving average method, we predict that the CRTP will move between 222.314 and 223.750 points next period, up 0-0.65%. The weighted CR Thermal Coal Price would likely edge up. 5. Spot trading index
Port Last week Mon 5500 kcal/kg (yuan/t) Stock (kt) Qinhuangdao Throughput (kt) Vessel queue Vessel expected Indonesia 5000 kcal/kg (yuan/t) Stock (kt) 840 5730 750 119 13 646 2630 Tue 840 5710 719 121 18 646 2690 Wed 845 5680 690 131 11 646 2600 Thu 845 5760 650 128 17 646 2550 Fri 845 5790 690 136 21 646
Guangzhou
Weekly CR China Coking Coal Price Index Analysis and Forecast

CR China Coking Coa l Index
1400 1200 1000 800 600 400 200 0 20-A pr-02 30-Jan-05 10-Feb-06 20-Jan-07 10-Jan-08 22-Dec-08 31-A ug-09 10-May -10 10-Jan-11
Pri ce In de x Sto ck In d ex M a rket Bal an ce In de x
Price index As of Jun 6, the CR China Coking Coal Price Index (CRCP) was 699.598 points, unchanged from one week before, while the CR China Coking Coal Stock Index (CRCS) decreased by 11.407 points or 2.32% from the previous week to 480.994 points. The CR Jingtang Imported Coking Coal Price Index or CR (JT) was 1349 yuan/t, the same as one week ago.
CR China Coking Coal Price Index and Forecast Range
1200 1000 800 600 400 200 0 13-Jan-02 01-N ov-04 10-Jan-06 20-D ec-06 10-Dec-07 01-Dec-08 10-Aug-09 19-Apr-10 20-Dec-10
Pri ce In dex Lon g-te rm tren d Lower li m it Up per li m it
Page 16 of 32
Price Main sample areas The price of coking coal remained steady in Shanxi this period (May 30-Jun 5). Of that, the VAT-included mine-mouth price of Liulin 4# primary coking coal stayed at 1150 yuan/t, unchanged from the last week. And, that of Lingshi 2# fat coal, Puxian 1/3 coking coal and Xiangyuan lean coal remained at 1040 yuan/t, 900 yuan/t and 670 yuan/t, the same as the week before. The VAT-included mine-mouth price of Lishi primary coking coal and Hongtong 1/3 coking coal stayed at 1045 yuan/t and 840 yuan/t, unchanged from the previous week. The free-on-rail price of clean coking coal also followed the same trend as the mine-mouth price. The FOR price of Liulin 4# clean primary coking coal was 1650 yuan/t, the same as the week before. And, that of Lingshi 2# clean fat coal, Puxian clean 1/3 coking coal and Xianghuan clean lean coal stayed at 1520 yuan/t, 1480 yuan/t and 1200 yuan/t, unchanged from one week ago. The FOR price of Lishi primary coking coal and Hongtong clean 1/3 coking coal remained at 1530 yuan/t and 1350 yuan/t, unchanged from the week before. While that of Lingshi 9# fat coal dropped to 1420 yuan/t, down 30 yuan/t from the previous week. Other main areas Coking coal price remained steady in other main production areas this period. The FOR price of Tengzhou gas fat coal and Yanzhou clean gas coal stayed at 1000 yuan/t and 1120 yuan/t respectively, and that of Wuhai clean 1/3 coking coal remained at 1100 yuan/t, all unchanged from the previous week. Meanwhile, the FOR price of Tongchuan clean coking coal and clean lean coal stayed at 650 yuan/t and 500 yuan/t respectively, unchanged from one week ago. And the ex-works price of Pingdingshan primary coking coal and clean 1/3 coking coal stayed at 1520 yuan/t and 1390 yuan/t, unchanged from the previous week. Stock: Our monitoring data shows, as of Jun 3, coking coal stockpiled at 32 major steel mills was 6.91 million tonnes, a decrease of 145,600 tonnes from the week before, which was enough for 16 days of consumption. 4. Price forecast (Jun 6-Jun 12)
550 500 459.499 450 400 621.820 350 334.712 300 293.465 654.969
CR China Coking Coal Price and Stock Index Trend

724.381 705.514
750 730 710 690 670 650 630 610 590 570 550
250 2010-7-5
2010-9-5
2010-11-5
Stock Index
2011-1-5
2011-3-5
2011-5-5
Price Index
The CRCS edged up this period, as indicated the above zoom-in chart of the recent coking coal price and stock index. While, the CRCP remained stable. The CR China Coking Coal Market Balance Index (CRCB) was 145.448 points this period, an increase of 3.369 points or 2.37% from the week ago. After a minor rebound, coking coal stockpiled at 32 main steel mills fell to below 7 million tonnes. Steel market runs weak recently, manifested by fluctuating price and mild transaction volume of the product. Affected by that, the overall coking coal market seams quiet. Starting from Jun 1, the country lifted sales price of power by an average of 1.67 cent in 15 provinces, which may push up production cost of steel makers to some extent. Coking coal market may still keep weak in the short term due to the impact from policies and lack of demand support. The forecast of coking coal price for next period is made with the moving average method. It is predicted that the CRCP will move between 699.598 and 705.514 points, up 0-0.85%. The weighted CR Coking Coal Price would likely keep stable. Spot trading index
Port Avg. price of imp. primary coking coal (yuan/t) Stock (kt) Jingtang Throughput (kt) Vessel queue Vessel expected Last week Mon 1349 Tue 1349 Wed 1349 Thu 1349 Fri 1349
1170 138 8 3
1130 138 6 7
1140 117 16 5
1150 113 12 3
1180 99 16 3
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Weekly CR China Met. Coke Price Index Analysis and Forecast

CR China Met. Coke Index
350
Pri ce Index
2500
Stock Index Market Bal ance Index
300 250 200 150 100
2000
1500
1000
500 50 0 0 26-Jun-06 26-Feb-07 26-Oct-07 26-Jun-08 26-Feb-09 26-Oct-09 26-Jun-10 26-Feb-11
Price index: As of Jun 6, the CR China Met. Coke Price Index (CRMP) was 197.235 points, unchanged for three weeks, while the CR China Met. Coke Stock Index (CRMS) dropped to 115.028 points, a decrease of 2.728 points or 2.32% from the previous week. The CR Tianjin Met. Coke Price Index or CR (TJ) was 2120 yuan/t, unchanged from one week ago.
CR China Met. Coke Price Index and Forecast Range
370 320 270 220 170 120 70 20 6-Feb06
Price Index Long-term trend Lower limit U pper limit
6-Sep06
6-Apr07
6-Nov07
6-Jun08
6-Jan09
6-Aug09
6-M ar10
6-Oct10
6-M ay11
Price: Coke price remained stable in most Chinas main production areas this period (May 30-Jun 5). Of that, the ex-works price of Grade II met. coke in Taiyuan and Linfen stayed at 1780 yuan/t and 1740 yuan/t respectively, unchanged from the week ago. And, that in Tangshan and Weifang remained at 1930 yuan/t and 1950 yuan/t respectively, the same as the previous week. While, that in Jincheng fell to 1750 yuan/t, down 30 yuan/t from the week before. Coke price in some southwestern China edged up. Of that, the ex-works price of Grade II met. coke in Liupanshui and Qujin rose to 1910 yuan/t and 2080 yuan/t, up 50 yuan/t and 30 yuan/t from the previous week. The purchase price of most steel mills for Grade II met. coke also kept steady this period. The purchase price of Grade I met. coke at Tangshan Steel and Tonghua Steel remained at 2070 yuan/t and 2100 yuan/t respectively, the same as the previous week. And, the purchase price of Grade II met. coke at Xiangtan Steel, Xinyu Steel, Shagang and Chengde Steel remained at 1920 yuan/t, 1910 yuan/t, 1950 yuan/t and 1850 yuan/t respectively, unchanged from one week before. Stock : Monitoring data showed Tianjin port had 1.37 million tonne of coke as of Jun 2, up 66,000 from the week before. While, coke stocks at Lianyungang dropped to 230,000 tonnes, down 30,000 tonnes from the week before. Price forecast (Jun 6 -Jun 12)
130 120 112.173 110 100 90 80 107.820 98.606 89.070 178.171 182.298
CR China Met. Coke Price and Stock Index Tre nd

116.650 198.902 110.159 197.880
210 205 200 195 190 185 180 175 170 2011-6-11
70 2010-10-11
2010-12-11
Stock Index
2011-2-11
2011-4-11
P ri ce Index
Page 18 of 32
The CRMP remained steady this period, reflecting a generally stable coke market for the time being, indicated the above zoom-in chart of the recent coke price and stock index. The CR China Met. Coke Market Balance Index (CRMB) was 171.467 points this period, up 3.972 points or 2.37% from the week before. Coke market ran stable in most ports of the country this period. Hebei Coking and Chemical Industry Association suggested coke plants to keep restricting production, reducing coal stocks and lowering purchase price. Relevant data showed coke companies are only running 80% of the full capacity on average for the time being. Recently, steel market has been fluctuating. And, coke purchase by steel makers in north China maintains steady thanks to less power rationing on these end users, which has eased stock pressure on coke plants. So far, Chinas coke supply has kept a balance with its demand. By analyzing the current coke supply-demand situation, we predict coke price would likely keep steady next period. The forecast of coke price for next period is made by the moving average method. It is predicted that the CRMP will move between 197.235 and 197.880 points, up 0%-0.33%. And, the weighted CR Coke Price would likely remain steady. Spot trading index Last week Port Mon Tue Wed Thu Fri Grade I met coke 2320 2320 2320 2320 2320 (FOB Tianjin yuan/t ) Stock (kt) 1318 1313 1343 1369
FREIGHT
Port of Newcastle Daily Performance Report (as at midnight of 9th June 2011) There is currently 1 vessel assembled with 21 vessels currently in queue. The average waiting time last week was 6 days compared to 4 days from the previous week. Port Coal Stocks on hand 933,000 tonnes. Actual volume for May was 116.6mtpa, target volume throughput for June 100.9 MTPA. Source: Hunter Valley Coal Chain Logistic Team Richards Bay - Coal loading (as at 0600 on 9th June 2011) There are no vessels alongside this morning. There is 1 vessel at anchorage. There are a total of 6 berths available for loading. Source: LBH South Africa Handysize and Max Market Report Pacific analysis: Indian ocean seen a bit of a slide today with supras fixing lower than they were hoping at the end of the week. Nopac rds and India/China biz have also softened today. Supramax very positional with right time and place commanding decent rates. Lots of handies on the market charters talking high 11k for supramax. Direction: softening Atlantic Analysis: Atlantic basin still feeling tight ppt vessels. Not much enquiry out of the Cont/Med but the hot spots in USG/ NCSA still tying up tonnage. That said for the first time this week a ceiling seems to have been reached for rates. Last couple of spot ships expecting premium levels but anticipating a softening not too far into the future. Direction: firm Source: Clarksons Handy/Max Market Update 9th June 2011 Cape Market Report Market Analysis: It was a busy day with plenty of fixtures reported, especially in the East. On west Australia-Qingdao rumours are that over 20 vessels have now been covered in total this week, with more being done today between $7.50 7.60 for end June dates. There is still very little T/A cargo available with the bid comfortably below index. On period, $10,500 has reportedly been concluded for 12 mos on a modern vessel with delivery in the Far East. Source: Clarksons Cape Market Update 9th June 2011
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Price Indication: Capesize RBCT Rotterdam $ 10.00 Previous $ 10.00 Panamax RBCT Rotterdam $ 15.86 Previous $ 15.21 th Source: Clarksons Daily Coal Report 9 June 2011 Dry bulk on retreat mode This week has offered dry bulk ship owners no real reason to smile, as the industrys benchmarket, the Baltic Dry Index (BDI) has been steadily falling, trimming the gains achieved during the past couple of weeks. Yesterday, the BDI was down by 0.42% to 1,428 with Capesizes once again on the downside. The Baltic Capesize Index (BCI) fell by 1.89% to 1,767. By contrast, the only positive tone in the market at the moment is the Panamax segment, which recorded gains of 2.42% yesterday to 1,903 points. Brokers indicated that ship supply is still weighing down in the market, with each single event in terms of cargo supply, being enough to send rates on a falling pattern. Vales deployment of the first in many of the worlds largest carriers, the so called Very Large Ore Carriers (VLCOs), able to carry 400,000 tons, isnt also helping the situation. Earnings for panamaxes, which usually transport 60,000-70,000 tonne cargoes of coal or grains, have more than halved since the same period last year said Reuters in a story. Brokers said coal cargoes from Australia and Indonesia to China was providing some support, although gains were capped by slower grains activity out of South America. It went to mention that operators were watching for further signs that China's economy was slowing, given the dry freight market's dependence on Chinese imports, especially of coal and iron ore. In its latest weekly report, shipbroker Fearnleys said that the Capesize market cold water is again coming out of the shower for owners as spot levels fall due to softening demand - average daily earnings down 10% w-o-w to come in at USD 10k. In Atlantic, fronthaul activity is cooling down, although rates not yet dramatically affected. The sudden lack of transatlantic trade is more felt, with a resultant drop of almost 30% to an estimated USD 10k/day. Far East remains challenging and keeps hovering around OPEX levels low USD 7ks for rounds and uninspiring USD 7.50 pmt for the Dampier/Qingdao conference trade. As forward paper prices give no support at present, period activity has come to a halt after a handful of units were concluded for short and medium periods - exemplified by 174kdwt/blt 2006 done for 12 months at USD 11k and 169kdwt/blt 2009 done for 4-6 months at USD 10500, both basis prompt delivery in Far East said the report. In the Panamax market, after a slow end to last week and even slower start to this week, the market improved on Tuesday in both hemispheres. The Atlantic saw several fresh cargoes fm USEC and ECSA, and in the Far East the upturn came due to fresh coal cargoes from Aussie and Indonesia to China. Now, at mid week, we are again at a crossroad with the players not sure where the market will be heading. We see some more interest in period deals now, and seems chrts feel the rates at ard USD 14k are interesting for twelve months. Atlantic rounds are getting fixed at ard USD 16k while front hauls are being fixed in the low/mid USD 20ks. Pacific rounds are being fixed around 13.5/14k while the backhauls are getting fixed around USD 6ks said Fearnleys. As for the smaller ship types, the report mentioned that its been a fairly quiet market across the board with another flat week/stagnant rates in store. Nevertheless, tonnage is thinning out in the Black Sea for the second half of June which might give some improvement on rates. Little activity on the Continent. USG remains stable on the back of regular petcoke exports. In the ECSA more cargoes are programmed for the second half of June thus look for better rates there in near future. The Pacific market is falling further with less activity. For Indo-India, Supras in North China are getting close to 10k. Nickel-ore rounds are getting firm rates in low-mid teens from Indonesia. WCI-China rates slided to 13k and from ECI around 12k. Red Sea, ferts on Handymax/Supras are fixed at very mid 20s pmt on voyage basis to WC India. Large Supras for RBCT/India round now asking 14k. Period deals done at 14-15k for large Supras concluded the report. Source: Hellenic Shipping News Worldwide
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OIL
Oil Futures Rise to One-Week High as OPEC Fails to Agree on Output Quotas Crude oil increased to a one-week high after OPECs failure to reach an accord on output targets for the first time in at least 20 years. Futures gained 1.2 percent following what Saudi Oil Minister Ali al-Naimi said was one of the worst meetings weve ever had. Ministers from the 12-nation Organization of Petroleum Exporting Countries were unable to come to an accord in five hours of talks in Vienna yesterday. Prices also rose as the U.S. trade deficit narrowed in April. OPECs failure to come to an agreement is still hanging over the market, said Tom Bentz, a broker with BNP Paribas Commodity Futures Inc. in New York. There was a short pullback upon release of the jobs numbers, but that was quickly overshadowed by the falling trade deficit. Crude oil for July delivery rose $1.19 to $101.93 a barrel on the New York Mercantile Exchange, the highest settlement since May 31. Prices are up 37 percent in the past year. Brent crude oil for July delivery increased $1.72, or 1.5 percent, to end the session at $119.57 a barrel on the London- based ICE Futures Europe exchange. It was the highest settlement since May 4. Brent, the European benchmark, traded at a record premium of $17.64 a barrel to U.S. futures. U.S. jobless claims climbed by 1,000 to 427,000 last week, Labor Department figures showed today in Washington. The number of people on unemployment benefit rolls and those receiving extended payments decreased. The trade deficit shrank 6.7 percent to $43.7 billion, the lowest level since December, Commerce Department figures showed today in Washington. U.S. equities rose for the first time in seven days on the trade deficit data. The Standard & Poors 500 Index advanced 1.1 percent to 1,293.80, and the Dow Jones Industrial Average climbed 125.18 points to 12,174.12 at 3:09 p.m. Saudi Arabia, OPECs biggest producer, Kuwait, Qatar and the United Arab Emirates were ready to supply more oil to the market, al-Naimi said yesterday in Vienna. The four nations proposed a 1.5 million-barrel-a-day increase. Libya, Angola, Ecuador, Algeria, Iran and Venezuela were opposed to higher limits, according to alNaimi. Iraq is exempt from the targets. The 11 members subject to quotas produced 26.22 million barrels a day last month, 1.375 million more than pledged, according to Bloomberg News estimates. The people asking for an increase in production targets were the only ones capable of increasing output, said Michael Lynch, president of Strategic Energy & Economic Research in Winchester, Massachusetts. Rumors that there would be a substantial increase in quotas are the primary reason the market reacted the way it did. This will have no impact on actual supply. OPECs quota system has been weakened by the need to replace Libyas lost oil, the groups secretary-general said after yesterdays divided meeting. A rebellion against Libyan leader Muammar Qaddafi has cut production in the North African country by almost 90 percent, according to Bloomberg estimates. I dont want to say it is dead, Abdalla el-Badri said today in Vienna, referring to the groups production target. It is there, but we have to see how to replace Libya. The International Energy Agency said it was disappointed that OPEC failed to agree on an increase in output, according to a statement e-mailed yesterday. Ongoing supply disruptions, as well as the fragile state of the global economy, call for a prompt increase in supply, the Paris-based group said. The agency advises 28 of the wealthiest nations on energy policy. The sentiment turned bullish on OPECs non-decision yesterday, said Carl Larry, director of energy derivatives and research with Blue Ocean Brokerage LLC in New York. Once we get to the $104-$105 area, youll probably see a selloff. Were still stuck in a range, and when we hit the higher end of it concerns are raised about demand destruction. Crude oil in New York has traded between $95.02 and $104.60 since May 9. U.S. gasoline demand fell 2.8 percent to 9.16 million barrels a day last week, leaving consumption 0.3 percent lower than a year earlier, according to an Energy Department report yesterday. Total fuel use climbed 0.5 percent to 19.2 million barrels a day, down 1.4 percent from the same week last year. Were still getting a bit of follow-through from yesterdays OPEC meeting and the U.S. inventory draw of nearly 5 million barrels, said Gene McGillian, an analyst and broker at Tradition Energy in Stamford, Connecticut. This has raised concerns about tightness later this year. U.S. crude-oil stockpiles decreased 4.85 million barrels to 369 million last week, the biggest decline this year, according to yesterdays Energy Department report. Oil volume in electronic trading on the Nymex was 726,989 contracts as of 3:08 p.m. in New York. Volume totaled 1.05 million contracts yesterday, the most since May 6 and 58 percent above the average of the past three months. Open interest was 1.53 million contracts. Source: Bloomberg
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STEEL
Baosteel announces price cut for July Leading steelmaker Baosteel announced today price reduction of most products for July, with hot rolled products to decrease RMB200/t ($31/t). Analysts forecast that other plate makers may follow Baosteels action, given poor performance of the automobile sector. Stats released by China Automotive Technology and Research Center show that May auto output was 1.31 million units, while sales were 1.19 million units, respectively dropping 14.36% and 13.95% month on month. However, construction steel market remains strong so far, supported by infrastructure and affordable houses construction. This is reflected on spot market, with 16-22mm HRB400 rebars traded at RMB4,940/t ($762/t) in Shanghai on June 9, rising RMB50/t from a month ago. By contrast, hot rolled coils were traded at RMB4,990/t ($770/t) in Shanghai, dropping RMB80/t ($12.3/t) month on month. Source: China Coal Times JSW Steel May crude ssteel production up by 2% JSW Steel Ltd. reported May steel production of 5.77 lakh tons, up by two per cent from the 5.65 lakh tons in the corresponding month a year-ago.In May, Rolled products-flat production was 3.90 lakh tons, compared with 3.88 lakh tons in May last year, an increase of one per cent, while Rolled products-long was 1.19 lakh tons, up by eight per cent from the 1.09 lakh tons in May 2010. JSW Steel shares at the BSE are being traded at Rs.925.35, down by 1.67 per cent from the previous close. Source: RTT News Taiwans CSC Issues output and sales results for May Taiwan's largest steelmaker China Steel Corporation has announced that in May this year its steel production volume dropped 1.13% month on month, decreasing to 770,653 metric tons, while the year-on-year decrease was 6.98%. In May, CSC's sales volume was 783,000 metric tons, decreasing by 3.96% as compared to April this year and down 9.81% year on year. In the month in question, the steelmaker's sales revenues amounted to NTD 20.72 billion ($722.29 million), falling by 0.21% month on month and up 2.62% year on year, while its income before tax totaled NTD 3,31 billion ($115.31 million). Source: Steel Orbis Outokumpu sees E.Asia stainless steel demand staying slow in Q3 Finnish stainless steel maker Outokumpu Oyj expects East Asian stainless steel demand to stay "fairly slow" at least in the coming quarter, a senior official said on Wednesday. Sami IIkka, GM of the company in China, Taiwan and South Korea, said that he was pessimistic about the near-term outlook of the East Asian stainless steel market. "The expectation we really have is that (the East Asian market is) going to be fairly slow, as it has been; at least in the third quarter, hopefully picking up later (in Q4)," he said. He added that rising imports from China, South Korea and Japan have dented their stainless steel business in Taiwan. A stainless steel mill official told the conference on Tuesday that China was likely to nearly double its stainless steel exports to 2.5 million tonnes this year. China has become a net exporter of the product since 2010, but the country still needs to import high-grade stainless steel. Beijing is expected to take further tightening steps in the months ahead to tame stubbornly high inflation levels in the world's second-largest economy. But IIkka said that the measures have not affected Outokumpu's business in China yet. Source: Reuters Turkey steel exports dip 8.8 percent in May Turkish steel exports have totaled $1.3 billion in May 2011, which represented a drop of 8.8% in value compared to April, according to figures released this week by the Turkish Exporters Assembly (TIM). However, the figure constituted an increase of 13.6% when compared to the countrys steel exports in May 2010. Overall, Turkish steel exports, which are dominated by rebars, have so far performed much better than they did last year. The total value of steel exports during the first five months of 2011 climbed to $6.47 billion, which constituted nearly 35% increase over the same period in 2010. Five Arab countries ranked among Turkeys top 10 steel buyers. They were respectively Iraq, Saudi Arabia, UAE, Egypt and Morocco, who accounted for $287 million, or 4.5%, of Turkeys total steel exports during the first five months of 2011, as detailed in the table below. New statistics show that Turkish steel exports to the UAE and Saudi Arabia have dramatically declined this year, while exports to each of Iraq, Egypt and Morocco have grown substantially. Iraq remains Turkeys largest Arab importer of steel products. In May its imports of Turkish steel dropped by 14.4% in value compared to April, leading to net imports worth $92.8 million. However, its imports of Turkish steel during the first five months of 2011 surged by more than a third, 37.2%, compared with the same period in 2010, according to TIM. Saudi Arabia (KSA), meanwhile, imported $55.6-million worth of steel products from Turkey in May, which was a 7.2% increase over its April imports. Comparing five-month imports ending by end May with the same period in 2010, shows that Saudi imports of Turkish steel have dropped by nearly 67%. The UAE witnessed the steepest drop in Turkish steel imports, at more than 70% during the five-month period. Its imports in May alone have dropped by nearly 45% compared to April, reaching $50.8 million. Turkish steel exports to Egypt in May more than doubled in comparison with April, reaching almost $45 million. This contributed to a fivemonth increase of 33.7% over 2010. Similarly, steel exports to Morocco witnessed a 110% increase in May as compared with the preceding month, April. Its five-month steel imports from Turkey rose by 22% over the same period in 2010. Source: ME Steel
IRON ORE Thursday, 9th June 2011 Physical: The physical market reported deal of a Indian tender of 63.5/63 @ 181.80, which may have breached the psychological level of 180, but still there is an element of caution that the market may be showing a slight reaction to the long abstinence of active buying and still the levels of 177-178 are viewed as fair levels. The element is caution is mainly from the point of view of Chinese interest rate hike. The indices are showing positive on the second straight day floating the sellers optimism. Swaps: The IOS market was largely subdued with few reported trades. Bids and offers were unwilling to move, the market happy to consolidate after yesterdays action. TSI was up $1 at $171.7 (mtd: $170.1). The post index afternoon saw the quarters rise by a dollar on the bid side and this was reflected in the Cal 12 as well.
62% Swap Curve (62%
Change Period
Jun-11 Jul-11 Aug-11 Sep-11 Q3 11 Q4 11 Q1 12 Cal 12 Cal 13 Spreads June/July Jul/Aug Aug/Sep Q3/ Q4 Q4/ Q1
Previous
62% Swap Curve (62%

Period
Jun-11 Jul-11 Jul-11 Sep-11 Q3 11 Q4 11 Q1 12 Cal 12 Cal 13 Spreads June/July Jul/Aug Aug/Sep Q3/ Q4 Q4/ Q1
Mid Point Mid Point $ 173.75 -$1.00 $ 173.00 -$1.00 $ 172.75 $0.00 $ 171.50 $0.00 $ 172.75 $0.00 $ 169.00 -$0.50 $ 164.00 -$0.50 $ 158.50 $0.00 $ 143.00 0.00 $ $ $ $ $ 0.75 0.25 1.25 3.75 5.00 $0.00 -$1.00 $0.00 $0.50 $0.00
Mid Point $ 174.75 $ 174.00 $ 172.75 $ 171.50 $ 172.75 $ 169.50 $ 164.50 $ 158.50 $ 143.00 $ $ $ $ $ 0.75 1.25 1.25 3.25 5.00
$185.00
$175.00
$165.00
$155.00
$145.00
Current Mid-Point Previous Mid-Point
$135.00 Jun-11 Jul-11 Aug-11 Sep-11 Q3 11 Q4 11 Q1 12 Cal 12 Cal 13
Recent TSI, Platts and Metal Bulletin Indeces

TSI 62%
195 190 185 180 175 170 165 160
TSI, Platts and Metal Bulletin Historical Data

TSI 62% 190 170 150 130 110 90 70 MB 62% Platts 62%
MB 62%
Platts 62%
U S $ /t C FR N . C hina
155
-D e 31 c -D ec 6Ja n 12 -J an 18 -J an 24 -J an 28 - Ja n 7Fe 11 b -F eb 17 -F eb 23 -F eb 1M ar 7M a 11 r -M a 17 r -M a 23 r -M a 29 r -M ar 4Ap r 8Ap 14 r -A pr 20 -A pr 28 -A pr 5M a 11 y -M a 17 y -M a 23 y -M a 27 y -M ay 3Ju n
U S $ /t C F R N . C h in a
London Commodity Brokers Page 23 of 32
50
-N 28 ov -0 -N 8 19 ov -0 -D 8 e 1 3 c -0 -J a 8 n 4-F - 09 e 24 b-0 -Fe 9 16 b-09 -M ar3-A 09 p 24 r-09 -A 14 pr-0 -M 9 ay 3-J -09 un 23 -09 -Ju n 13 -09 -J u 31 l-09 -J 20 ul- 0 -A 9 ug 9-S -09 29 ep-0 -S 9 e 19 p-09 -O c 6-N t- 09 o 26 v -0 -N 9 16 ov -0 -D 9 e 8-J c -09 a 28 n-10 -J a 17 n-1 -F 0 eb 9-M -10 29 ar-1 -M 0 a 19 r- 10 -A 10 pr-1 -M 0 28 ay-1 -M 0 a 18 y-10 -J u n 8-J -10 u 28 l-10 -J 17 ul-1 -A 0 ug 6-S -10 e 24 p-1 -S 0 e 14 p-10 -O c 3-N t-10 2 3 o v -1 -N 0 13 ov -1 -D 0 31 ec -1 -D 0 e 2 0 c -1 -Ja 0 11 n-1 -Fe 1 b 3- -11 Ma 23 r -1 -M 1 a 12 r-11 -A p 5- r-11 M 25 ay -1 -M 1 ay -11 10
27
China Iron Ore Stock Pile By Regions

w ww .Steelhome.com
China Iron Ore Stock Pile By Origin

www.Mysteel.net
90.M t
100,000
Northern Ports Yangtse River Southern Ports
Other Origin Mt
80.M t
Indian Mt
Brazilian Mt
Australian Mt
90,000 80,000 70,000
70.M t
60.M t
60,000 50,000 40,000 30,000 20,000

20.M t 50.M t
40.M t
30.M t
10,000 0
Jan -1 0 e b -1 0 ar - 10 p r - 10 y - 1 0 un -1 0 J u l- 10 g -1 0 e p -1 0 ct- 10 o v -1 0 e c -10 a n-1 1 eb - 11 ar -1 1 pr -1 1 y - 1 1 J O J F M A S N D F M A Ma Au Ma
10.M t
0.M t
Indicative Iron Ore Prices in China

China Local Spot Prices RMB/wmt 58 Indian Fines 1,010.00 61 Indian Fines 1,160.00 63 Indian Fines 1,270.00 62 OZ Fines 1,290.00 65 BZ Fines 1,350.00 CIF China Import Prices CIF US$/dmt 63.5/63 Indian Fines $178.00 62/61 Indian Fines $167.00 61/60 Indian Fines $161.00 60/59 Indian Fines $154.00 59/58 Indian Fines $147.00 58/57 Indian Fines $138.00
CIF China Import Prices CIF $220 $200 $180 $160 $140 $120 $100 $80 $60
2-J u 1 8 n -1 -J u 0 n 6 - J -1 0 u 2 2 l- 1 0 -J u 9 -A l-1 0 u 2 5 g -1 -A 0 ug 10 -1 -S 0 28 e p-1 -S 0 e 2 5 p-1 -O 0 1 0 c t -1 -N 0 2 6 o v -1 -N 0 1 4 o v -1 -D 0 3 0 e c -1 -D 0 e 1 8 c -1 -J a 0 n 7 -F -1 1 eb 23 -1 -F 1 eb 0 3 -1 1 /1 1 0 3 /11 /2 9 0 4 /11 /1 4 05 /11 /0 5 0 5 /1 1 /2 3 0 6 /1 1 /0 9 /1 1
U S$/ dm t
IN FeO Fines 63.5/63 IN FeO Fines 60/59
IN FeO Fines 62/61 IN FeO Fines 59/58
Page 24 of 32
CIF China Import Prices CIF 1,700 1,500 1,300 cn m y/d t 1,100 900 700 500
2Ju n 18 -1 0 -J un -1 0 6Ju l-1 22 0 -J ul -1 90 A ug -1 25 -A 0 ug -1 10 0 -S ep -1 28 -S 0 ep 25 -10 -O c 10 t-1 -N 0 ov -1 26 -N 0 ov -1 14 -D 0 ec -1 30 -D 0 ec 18 -10 -J an -1 1 7F eb -1 23 -F 1 eb -1 1 03 /1 1/ 03 11 /2 9/ 11 04 /1 4/ 11 05 /0 5/ 11 05 /2 3/ 06 11 /0 9/ 11
IN FeO Fines 58 AUS FeO Fines 62
IN FeO Fines 61 BRZ FeO Fines 65
IN FeO Fines 63
NOTE: Above prices may reflect a difference in relation to the financial price as Import Tax of 17%, Port handling charges and Rail Freight are included. Source: Umetal Capesize Freight Routes C3, C5, FFA (Cape C3,C5
FFA
Period Jun-11 Q3 11 Q4 11 Q1 12 CAL 12

Source:
Bid 10,000 8,750 10,250 10,250 12,000
Ask 10,250 9,000 10,500 10,750 12,350

Routes Cost (US$/t)
Movement (US$/t)
C3 - Tubarao - Qingdao, China C5 - W Australia - Qingdao, China

Source: Clarksons - 7th June 2011
20.288 7.571
-0.522 -0.164
Clarksons 7th June 2011
LDB Market Metric LDB
Maturity of Rebar Future Maturity of Iron Ore Swap TSI 62% Iron Ore Swap US$/t Implied Input Cost Iron Ore to Steel (1:1.6) US$/t Rebar Shanghai Futures Exchange RMB/t Exchange Rate CNY/USD Rebar Shanghai Futures Exchange US$/t London Dry Bulk Red Hot Spread LDB US$/t
$ $ $ $
Oct-11 Oct-11 169.00 270.40 4,862 6.4801 750.30 479.90
Page 25 of 32
Red Hot Spread (US$/t)*:
$600.00
$550.00
$500.00
$450.00
$400.00
$350.00
20 09 7/ 10 /2 00 7/ 30 9 /2 00 8/ 9 20 /2 00 9/ 10 9 /2 00 9/ 9 30 /2 00 10 9 /2 7/ 20 11 09 /1 6/ 20 09 12 /4 /2 00 9 1/ 5/ 20 1 1/ 25 0 /2 01 2/ 0 22 /2 01 3/ 0 12 /2 01 0 4/ 1/ 20 10 4/ 21 /2 01 5/ 11 0 /2 01 0 6/ 2/ 20 10 6/ 21 /2 01 0 7/ 9/ 20 10 7/ 29 /2 01 8/ 0 18 /2 01 0 9/ 7/ 20 1 9/ 27 0 /2 01 26 0 /1 0/ 20 11 10 /1 5/ 20 10 12 /3 /2 01 12 0 /2 3/ 20 10 1/ 13 /2 01 1 2/ 2/ 20 11 2/ 24 /2 01 3/ 1 16 /2 01 1 4/ 5/ 20 11 4/ 27 /2 01 5/ 18 1 /2 01 1 6/ 8/ 20 11
IRON ORE NEWS

Iron ore spot extends gains, limited high grade supply Spot iron ore prices edged up on Thursday, extending recent gains, as Chinese steel mills continued to restock and with high-grade Indian material in tight supply as monsoon rains hamper shipments. "We are getting more inquiries from mills who have low inventory levels of iron ore. There is also a shortage of high-grade material at the moment because supply from the Indian side is still tight," said a shipping manager for an iron ore trading firm in Shanghai. Indian ore with 63.5 percent iron content was offered at $177-$179 a tonne, including freight, on Thursday, up from $175-$178 the previous day, said Chinese consultancy Umetal. Australian 62 percent Newman fines were quoted at $175-$177 a tonne, also up from the previous day's $174-$176, Umetal said. Apart from monsoon rains which make it difficult for iron ore to be shipped from Indian ports, other logistical problems have slowed movement of iron ore from the world's No. 3 supplier of the steelmaking ingredient. "Railway freight rates are too high so exporters are preferring to transport their cargo via road which has limitations. Also, Karnataka is yet to start dispatches," said Dhruv Goel, managing partner at iron ore trader Steelmint in India's eastern Orissa state. Indian Railways hiked iron ore freight rates at least twice this year as prices of the raw material soared due to booming demand from China. It also imposed a "busy season" charge on iron ore shipments from April 1 to June 30 and from Oct. 1 to March 31. And despite lifting a ban on iron ore shipments in April, India's Karnataka has yet to resume exports given the slow issuance of permits. Iron ore indexes, based on Chinese spot prices and which global miners use to settle quarterly contracts, rose for a second day on Wednesday after losing around 6 percent last month. The Steel Index's 62 percent benchmark .IO62-CNI=SI rose a dollar to $171.70 and Platts own 62 percent index IODBZ00-PLT also climbed by a dollar to $173.75. Metal Bulletin's similar gauge .IO62CNO=MB ticked up 6 cents to $171.24. Gains in iron ore prices may be short-lived if China's power shortages worsen such that steel mills may have to curb output, analysts said. "It's not yet widespread but the risks are there going forward. If some of the small to medium-sized steel mills facing power supply problems cut their steel production that will affect iron ore demand," said Judy Zhu, commodity analyst at Standard Chartered Bank in Shanghai. "But even if we see spot prices fall from current levels because of weaker demand as we enter the third quarter, the traditional off-peak season, the downside risk is very limited because supply is still very tight." Prices of nearby forward swaps retreated on Wednesday after recent steep gains, although losses were modest. The Singapore Exchange-cleared June contract dropped 92 cents to $172.83 a tonne, July slipped 70 cents to $172.42 and August was off 4 cents at $171.83. In a sign Chinese steel demand may falter next month, leading Chinese steelmaker Baoshan Iron and Steel said it will cut prices of its key products for July by 100-200 yuan ($15-30) per tonne. The most active rebar contract for October delivery on the Shanghai Futures Exchange dropped 0.4 percent to close at 4,849 yuan per tonne. Source: Reuters
6/ 22 /
Iron Ore May Remain around two week high, Simpson Spence says Iron-ore prices may remain around a two-week high as steel mills replenish stockpiles of the raw material and Indias monsoon season curbs exports, said Simpson Spence & Young Ltd., the second-biggest shipbroker. The price of ore with 62 percent iron content at Chinas Tianjin port last fell on June 1 and has since gained 1.7 percent to $171.70 a metric ton as of yesterday, Steel Business Briefing Commodities Research data show. Thats the highest level since May 25. Short term, we should see it trading in a tight range, Simon Hardy, head of iron-ore swaps derivatives with Simpson Spence & Young in London, said by e-mail today. Mills are running low on stocks, which should support prices, though how high they may rise is difficult to say, he said. High-grade iron ore is in tight supply as the monsoon season nears, Hardy said. India, the third-biggest iron-ore exporter after Australia and Brazil, is swept by rains from June to September that disrupt infrastructure and deliveries to ports. At the same time, China faces a power shortage after a dry spell in central and southern regions cut hydropower generation. That may curb factory output. China, the worlds biggest iron-ore consumer, may face an electricity shortfall of 30 million kilowatts during the summer peak this year, analysts including Lu Yanjin at Industrial Securities said on May 20. That might reduce industrial output by 3.6 percentage points, they said. In turn, that may discourage steel mills from building stockpiles of iron ore, checking prices. China produces 47 percent of crude steel globally, according to data from the World Steel Association. Source: Bloomberg Ban sought on transport of iron ore in state Samaj Parivartana Samudaya (SPS), which has filed a PIL in the Supreme Court against illegal mining in Bellary district, has urged the government of Karnataka not to allow transportation of iron ore of 99 mining companies on which a fresh survey ordered by the forest bench of the SC is underway. Speaking to reporters here on Wednesday, S R Hiremath of SPS said that while the survey of all 99 mining companies was yet to be completed, the government allowed three companies (Hothur Traders, H G Ranganagouda, and V S Lad & Sons) to transport ores, buckling under pressure from the companies. Further, he said that the order was withdrawn within two days after the matter came to the notice of SPS following which it took up the matter with the director of mines and geology. Stating that no such permission should be given henceforth till the survey is completed Hiremath also questioned the seriousness of the state government in curbing illegal mining. Source: Business Standard Indias april May iron ore exports from Goa port fall source Iron ore exports from India's Mormugao port fell 11.8 percent to 8.2 million tonnes in April-May due to a four-fold rise in export tax and local transportation issues, a port source said. Exports steadied to 4.23 million tonnes in May from 4.15 million tonnes in the year-earlier period, the official, who was not authorised to speak to the media, told Reuters. India is the world's third biggest exporter of the steel-making ingredient. Source: Reuters Cabinet gives thumbs up to ten-commodity beneficiation strategy President Jacob Zumas Cabinet has finally approved South Africas long-incubated ten-commodity beneficiation strategy, which sets out to leverage long-term benefits from the countrys substantial mineral endowment. The Cabinet says in a media release that the beneficiation strategy provides a framework capable of translating the country's minerals into competitive industrial advantage. The beneficiation strategy, developed under the leaderhip of Mineral Resources Minister Susan Shabangu, centres on ten commodities and five value chains. The ten selected commodities are gold, platinum, diamonds, iron-ore, chromium, manganese, vanadium, nickel and titanium, with coal and uranium bracketed together, and five value chains are energy, steel and stainless steel, pigment production, autocatalyst and diesel particulate filters, diamond processing and jewellery. Sidestream beneficiation is recognised, but downstream value addition emphasised, embracing capital-intensive smelting and refining and including labour-intensive craft jewellery and metal fabrication. The Cabinets acceptance underpins South Africas historic 2010 joint government, labour and business declaration, which recognised beneficiation as a means of translating South Africas comparative mineral advantage into a competitive advantage to fuel further industrialisation. The tripartite declaration of 2010 included a joint commitment to add value addition to add value in South Africa rather than export raw ore. The 13commitment joint declarations fifth commitment is to consider the establishment of a national beneficiation agency that is mandated to drive downstream, upstream and sidestream beneficiation as well as all mining-linked industries; and to enlist the support of strategic international partners to develop skills and to transfer technology. The new policy presents exciting opportunities for long-term investment, for both local and foreign investors, into beneficiation and manufacturing sector of the South African economy. This will leverage optimal benefit from enhanced value of exports, increasing sources for consumption of local content and contribute towards the creation of sustainable jobs, the Cabinet says. Source: Mining Weekly
Page 27 of 32
Exxaro reviewing its options after Noble trumps Territory bid South African diversified miner Exxaro on Thursday urged Territory Resources shareholders not to take any action on the A$132.6-million offer from Hong Kong-based Noble Group. Exxaro, which is offering A$123-million for Territory, is reviewing its position, spokesperson Hilton Atkinson told Mining Weekly Online. Noble, which already has a 30% stake in Territory, is offering shareholders A$0.50 a share, trumping Exxaros A$0.46-a-share offer for the iron-ore assets in Australias Northern Territory. By making this offer to secure our holding in Territory we aim to ensure that its attention on growth will not in future run the risk of being deflected by any more opportunistic corporate actions, said Noble. At current production levels of between 1.6-million tons and 1.8-million tons a year, the Frances Creek mine has a life of about three years, with near-mine potential of another two to three years. Exxaro is bidding for Territory in an effort to re-enter the iron-ore market and eventually produce ten-million tons of iron-ore a year. The miner had previously stated that it would also consider more iron-ore opportunities in South Africa and the rest of Africa. Territory said in a statement that its board would meet Thursday to review the new offer, which will remain open until July 21. Shares in Territory jumped 11% to A$0.52 apiece on the ASX on Thursday. Source: Mining Weekly Africa may turn major iron-ore exporter after 2020 Africa, regarded as the next iron-ore frontier, is only likely to boost global supply from 2020 and only if countries overcome infrastructure and political hurdles, analysts and producers said this week. The market for iron-ore, used in stainless steel production, is the second biggest commodity trading market in the world, valued at some $150-billion, said Phillip Killicoat, iron-ore manager at Credit Suisse commodities. Of that, Africa accounts for only about 2%, although it holds some 20% of the world's resources, he said. "Africa has enormous potential, never mind the fact that the iron industry itself is growing at a rate even faster than global GDP, driven primarily by East Asia," Killicoat told an African iron-ore conference in Cape Town. Steel demand, spurred by China's economic growth, has recovered more than anticipated in 2010, with future growth expected to be powered by emerging markets to 2015 and beyond. Africa, the world's poorest continent where many countries still rely on their minerals as a key foreign currency earner, hopes to cash in on this forecast amid good prices for iron ore. "China is expected to increasingly turn to Africa to satisfy its iron ore needs ... (as) more Chinese companies look to invest or partner in mines," Yaoyun Xin, managing director at independent metals consultancy SMM Information and Technology told Reuters. Top global iron miners, including Rio Tinto, Vale and ArcelorMittal, have projects either in production or at an exploration stage in Africa, with three major iron ore-bearing regions identified in the west, central and southern parts of the continent. At the moment, Australia and Brazil are the two top global producers of the material, with South Africa being the only African country recognised as a major exporter, accounting for about 80 percent of the continent's total output. "African projects are only expected to contribute less than 5% of the projected 47% growth in global iron ore demand by 2020," said Ian Cope, global exploration manager for iron and coal at ArcelorMittal, the world's largest steelmaker. "The potential is there but there are challenges and it's not a given that this ore will get out of Africa." Among the challenges are inadequate rail and ports to move the ore, regulatory uncertainty as well as environmental concerns and a lack of a skilled workforce. Cope said most of the iron ore in Africa was of a lower grade, although top grade hematite deposits were found in South Africa, the Democratic Republic of Congo and Guinea, where the promising Simandou deposit was in the process of being mined. "By 2025 we see it is possible that Africa can supply 200 million tonnes per annum of additional iron ore into the iron ore market," said Ernst Venter, a manager at Exxaro. He said the forecast excludes current expansion plans for the Sishen mine owned by Kumba Iron Ore, the world's 10th largest producer and the biggest in Africa. Source: Reuters
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FORTHCOMING CONFERENCES
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TABLE OF CONTENTS

Bevan Jones Johannesburg Manager Tracy Zungu Emma Franz

Gareth Hudson - Singapore Manager James Graham-Clarke

London Commodity Brokers

Friday, June 10, 2011

DES / CIF ARA

FOB Richards Bay

June-11 July-11 Aug-11

$ 124.45 $ 125.23 $ 126.00

$ 120.25 $ 121.17 $ 122.00

$ 121.00 $ 123.45 $ 124.40

Sep-11 Q3 11 Q4 11 Q1' 12 Q2' 12 CAL 12 CAL 13 CAL 14 CAL 15

$120.95 -#$1.50 #$0.25 $ 122.83

$ 130.20 $ 130.50 $ 130.75 $ 133.40 $ 135.90 $ 138.15

$ -#$1.00 126.20 $ -#$0.25 126.40

-#$0.60 +#$0.40 -#$0.50 -#$0.50

-#$0.10 +#$0.50 +#$0.50

$ 129.50 $ 129.70 $ 129.90 $ 130.55 $ 132.40 $ 134.40

$ 126.65 $ 128.30 $ 130.65 $ 132.90

Coal Paper Market Mid Point Curve $150.00

London Commodity Brokers

SGX AsiaClear OTC Sub-Bituminous Coal FOB Indonesia Swaps

Daily Settlement Price Prev Daily Settlement Price

Prev Averag DSP

88.87 89.83 90.36 90.96

88.9 89.86 90.45 91.04

London Commodity Brokers

Friday, June 10, 2011

SUMMARY OF CHINA COAL PRICES

9-Jun-11 890.00 840.00 745.00 650.00 520.00 62.00 51.00 51.00 $ $ $ $ $ $ $ $

2-Jun-11 885.00 840.00 740.00 640.00 520.00 62.00 53.00 53.00

Qinhuangdao FOBT - (refer China Coal Resources - Daily Market Watch)

106.23 99.89 87.86 75.82 59.35 9.54 7.85 7.85

$ 105.59 $ $ $ $ $ $ $ 99.89 87.22 74.56 59.35 9.54 8.15 8.15

5.00 5.00 10.00 -2.00 -2.00

0.63 0.63 1.27 (0.31) (0.31)

China Coastal Freight

NAR NAR NAR NAR NAR

1,002.00 952.00 857.00 762.00 632.00

Shanxi Shanxi Shanxi Shanxi Shaanxi Shanxi

NAR NAR NAR NAR NAR NAR

5,500 5,500 5,000 4,950 4,900 4,400

Ex Stock Ex Stock Ex Stock

965.00 945.00 865.00 845.00 815.00 720.00

Ex Stock Ex Stock Ex Stock Ex Stock Ex Stock Ex Stock Ex Stock

860.00 850.00 780.00 560.00 490.00 470.00 960.00 990.00

102.43 101.16 92.29 64.42 55.55 53.02 115.10 118.90

860.00 850.00 780.00 560.00 490.00 470.00 960.00 990.00

$ 102.43 $ 101.16 $ $ $ $ 92.29 64.42 55.55 53.02

China Domestic Coal prices FOB Qinhuangdao

100 9,000 90 80 70 60 6,000 50 5,000 40 30 20

China Domestic Coastal Freight (RMB)

7,000 700 600 500 400 300

London Commodity Brokers

Friday, June 10, 2011

London Commodity Brokers

Friday, June 10, 2011

London Commodity Brokers

Friday, June 10, 2011

London Commodity Brokers

Friday, June 10, 2011

London Commodity Brokers

Friday, June 10, 2011