William Wang, China Analyst, Argus Media

1. London, Houston, Washington, New York, Portland, Calgary, Santiago, Bogota, Rio de Janeiro,
Singapore, Beijing, Tokyo, Sydney, Dubai, Moscow, Astana, Kiev, Porto and Johannesburg
illuminating the markets
Energy and commodity price benchmarking and market insights

2. illuminating the markets
Coal Pricing Outlook-Key Trends for Mongolia
Ulaanbaatar, Mongolia
William Wang, China Analyst, Argus Media
19 June 2013

3. illuminating the markets
Argus: some quick facts

4. illuminating the markets
• World’s largest independently
held energy price reporting
agency
• Price indexation, news, data and
analysis for energy and
commodity markets
• Founded 1970, 500 staff in 24
countries
• 8000 price assessments a day
across 80 energy publications
Argus is a leading energy price reporting agency
Copyright © 2013 Argus Media Ltd. All rights reserved.

5. illuminating the markets
• Largest team of coal reporters of any
publisher
• Coal correspondents in Australia,
Singapore, Beijing, Tokyo, Moscow,
London, South Africa, Washington DC
and Colombia
• Publisher of: Coal Daily International,
Argus/McCloskey Coal Price Index
Report, Argus/Coalindo Indonesian Coal
Report, Argus Steel Feedstocks, Argus
Russian Coal, Coal Daily (US market),
Coal Transportation report (US market)
Argus and coal
Copyright © 2013 Argus Media Ltd. All rights reserved.

6. illuminating the markets
• Cif ARA – contributes to API 2
• Fob Richards Bay – contributes to API 4
• Fob Newcastle 5500 – contributes
to API 5
• Fob Newcastle – contributes to API 6
• Cfr south China – contributes to API 8
Thermal coal indices
Copyright © 2013 Argus Media Ltd. All rights reserved.

7. illuminating the markets
• Fob Australia - contributes to API C1
• Cfr Japan
• Cfr north China
• North China domestic
• Cfr east coast India
• Fob Hampton Roads (mid vol/high vol)
Coking coal indices
Copyright © 2013 Argus Media Ltd. All rights reserved.

8. illuminating the markets
The same target market for both waterborne and
land-carriage cargoes
0.00
50.00
100.00
150.00
200.00
250.00
2012/4/6 2012/5/6 2012/6/6 2012/7/6 2012/8/6 2012/9/6 2012/10/6 2012/11/6 2012/12/6 2013/1/6 2013/2/6 2013/3/6
Waterborne VS Land-carriage
DAP GQMD(USD) CFR North China
Sources: Argus
Copyright © 2013 Argus Media Ltd. All rights reserved.

9. illuminating the markets
Regional Dynamics on Mongolian Coal Prices
• It is uneconomic to export Mongolian coal through Russia or China by
railway
• Therefore China will be the main target market for Mongolian coal for a
long time
• Mongolian coal to China has to compete with China domestic coal and
imported waterborne cargoes
• Railway transportation is the bottleneck for Mongolian coal to China
• Unstable regulation on both countries makes it risky to trade and invest in
Mongolian coal
• China is expected to issue a ban on imported coal in the second half 2013
• Dalian Commodity Exchange launched coking coal futures on 22 March
2013, opening another opportunity for coking coal from Mongolia
Copyright © 2013 Argus Media Ltd. All rights reserved.

10. illuminating the markets
China is the most important market for Mongolia coking coal
0
20
40
60
80
100
120
0
500,000
1,000,000
1,500,000
2,000,000
2,500,000
3,000,000
Jan/12 Feb/12 Mar/12 Apr/12 May/12 Jun/12 Jul/12 Aug/12 Sep/12 Oct/12 Nov/12 Dec/12 Jan/13 Feb/13 Mar/13
unit:ton
import volume import priceSources: China Customs
Copyright © 2013 Argus Media Ltd. All rights reserved.

11. illuminating the markets
• Buyers in China and India look for low prices and value, and focus
less on quality
o Less focused on relationships and security of supply
o Will swing to where ever coal is cheapest
• This forces producers to be more responsive to the market
• This means the Asian market will be more exposed to shifting prices
• Buyers will be less likely to default on cargoes if the prices reflect
the current market
• Use of indices and market-based mechanisms will grow
Indexation reduces risk on price and volume
Copyright © 2013 Argus Media Ltd. All rights reserved.

12. illuminating the markets
• Reflects cfr North China Premium Hard Coking Coal
• Launched Apr 2010
• Publishing daily price
• Comprising market survey of 15-20 key participants
• Deals done by international producers/traders
• Methodology is same as other API indices
o 50% volume weighted average of confirmed deals
o 50% average of bids and offers divided by market position
Argus CFR North China used in coking coal contract
Copyright © 2013 Argus Media Ltd. All rights reserved.

13. Any questions?

14. Thank you
William Wang
China Analyst, Argus Media
Email: william.wang@argusmedia.com
Phone: +86 10 6515 6521
URL: www.argusmedia.com
Copyright notice
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