The Asia Miner

OCT-DEC 2015

The ASIA Miner - Reporting Important Issues to Mining Companies in the Asia Pacific Region

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October-December 2015 | ASIA Miner | 41 For more information, visit the event website: www.ihs.com/2015coalconference For questions and further details on registering and sponsorship opportunities please contact :coal.events@ihs.com Regulations and Efects of Domestic Coal Trade & Production Pandu Patria Sjahrir, ICMA Chairman and Director, Toba Bara Sejahtra Indonesia's Role in the International Supply Market Bob Kamandanu, Chairman, Trafigura Indonesia Managing the Downturn - Increasing Efficiencies Jefrey Mulyono, President Director, Bhakti Energi Persada When does demand and supply come into balance? David Price, Senior Director, Global Steam Coal Service, IHS Energy Insight The next wave of Asian Coal demand - is it waning? James Ooi, ASEAN Power, IHS Energy Insight Chinese Import Challenges Xiaomin Liu, Associate Director, China Coal & Power, IHS Energy Insight Health Check for China, India & Indonesia Rajiv Biswas, Senior Director & Asia Pacific Chief Economist, IHS Economics Confirmed presentations and speakers so far Asia Pacific Coal Outlook Conference 23-24 November 2015 | Sofitel Bali, Indonesia CH-0815 In association with Sponsor Registration Type Single Delegate Multi Delegate rate (min 3 delegates) CCI/ DMC/ICMA member Promotional Price US$1,395.00 US$1,295.00 per delegate Same company only Full Standard Price (No discount) US$1,995.00 US$1,595.00 per delegate mccloskeycoal.com © 2015 IHS 7 August 2015 McCloskey Coal Report | 1 7 August 2015 | Issue 366 mccloskeycoal.com IHS Energy McCloskey Coal Report Comprehensive news & analysis of the international coal market © 2015 IHS Licensee warrants and undertakes to IHS that it recognises and will not infringe the copyright and any other intellectual property right of IHS in the Publications; it shall not use, distribute, reproduce, copy, transmit or enter into any computer or computer network or procure or permit the use, distribution, reproduction, copying, transmission or entering into any computer or computer network of any or any part of the Publications, including, but not limited to, single prices, charts and altered Data, unless expressly permitted to do so under IHS. Indonesian coal output could fall 20% in 2015 INDONESIA'S COAL OUTPUT is expected to fall to below 400 mt this year, from estimates as high at 500 mt last year, according to more than half of 50 market participants polled by IHS McCloskey. The decline is a response to weak international demand led by the slowdown in China, falling prices and compounded by softening domestic demand. A total of 24, or 48%, of those questioned expect Indonesian coal production to fall to 350-400 mt this year, with two respondents predicting output of below 350 mt. "My take is it's going to be about 350 mt this year. The production numbers so far have been very low," said Pandu Sjahrir, chairman of the Indonesian Coal Mining Association and director of Toba Bara Sejahtra. A further 38% think production will fall to 401-450 mt. That compares with a Ministry of Energy and Mineral Resources (MEMR) figure of 474 mt in 2014, and industry estimates—which take into consideration illegal mine output—of 474-500 mt. In the first half of this year, Indonesia produced just over 200 mt, of which 164 mt was exported, according to the MEMR, with weak demand from key buyers such as China and India the reason for the weak performance. "Demand from China has dropped so much and we are not seeing many requests from India," a medium-size miner said. "It's tough, really tough." "We are probably going to see the decrease accelerate further in the second half of this year," a source at one of Indonesia's largest miners added. Looking ahead, government figures and industry estimates are expected to move closer together, having historically been very far apart. In 2013, there was a diference of more than 70 mt between ofcial and unofcial production estimates, but data are becoming more synchronised as the government tries to stamp out illegal mining and low prices squeeze some participants out of the market. "It's economics. A lot of illegal miners are having cash-flow problems," Sjahrir said. Market round-up ASIA Japanese buying supported Newcastle pricing in early August. Hokuriku Electric booked two October cargoes at $61.00/t FOB, basis 6,000 kc NAR. Hokkaido Electric and J-Power were also seeking spot volumes. Tightness was concentrated at the prompt, with longer-dated deliveries easier to find. Australian high-ash products weakened, in line with Chinese domestic pricing. Bids were as low as $42.50/t FOB, basis 5,500 kc NAR. Indonesia continues to weaken, with low rank most active, trading around $28.50/t FOB, basis 4,200 kc NAR, for prompt geared Supramaxes. EUROPE Atlantic thermal prices were rangebound this week, with activity subdued. Demand is weak, especially in Northern Europe where stockpiles are high and renewables output is strong. Supply is good from major origins, but higher freights from Colombia are pressuring FOB prices. Colombia's Fenoco expects to hear within two weeks whether new noise-reducing measures will allow it to resume night railings. Russian coal is competitive in ARA, especially with its freight advantage over Colombia. There was a suspension at Glencore's Optimum mine early this week, but this was lifted on 7 August. IHS McCloskey key physical markers Aug-14 Jul-15 31-Jul 07-Aug NW Europe steam coal marker ($/t) 77.01 58.43 57.79 57.64 Richards Bay FOB marker ($) 71.19 57.28 56.23 56.10 Newcastle FOB marker ($) 68.94 59.15 59.40 59.20 Australian 5,500kc NAR FOB marker ($/t) 57.06 45.09 44.00 43.00 South China 5,500kc NAR CFR marker ($/t) 66.97 51.97 51.35 51.10 Indonesian sub bit FOB marker ($/t) 53.33 43.35 43.00 42.70 Australian prime hard coking coal FOB ($/t) 113.60 86.88 83.69 84.80 Colombian FOB Marker ($/t) 68.40 52.85 51.55 49.80 Weekly average German power price - (E/MWh) 27.82 35.11 25.61 31.59 Carbon - (E/t) 6.29 7.70 7.94 7.89 Source: IHS Energy, Xinhua Infolink, Marex Spectron > 350 mt 350-400 mt 401-450 mt 451-500 mt Indonesian coal production forecasts, 2015 Source: IHS Energy

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