1. ICCC wrap up review and learnings
Dr Neil J. Bristow
ICCC 24 Hong Kong 16th November 2016
H & W Worldwide Consulting

2. Wrap Up and Learnings Overall economic outlook China
It’s a China story - again
Major change not GDP but manufacturing and IP
Delayed interest rate rises
China
Large liquidity injections
Major boost to infrastructure and housing starts
Leading to much higher steel demand and production
Steel/pig iron in 2016 > 2015; will be >800Mt
Power consumption much higher than forecast
H & W Worldwide Consulting

3. Wrap Up and Learnings Met Coal Thermal Coal It’s a China story – again
Cuts to production as demand improved, rising imports
Major inventory drawdown, now shortages
ROW lack of inventories, and supply factors = tightness
Remaining tight into mid late 2017
Thermal Coal
It’s a China story - again
Restated production improve conditions into 2017
H & W Worldwide Consulting

4. Outlook and Learnings Future Outlook Learnings
Rising uncertainty with “The Donald” but pro coal
2017 concerns re inflation
China strong until elections; steel >800Mt, power up
Costs likely to rise as probably at trough
Learnings
Don’t count China out
Don’t believe forecasters!
Understand the inventory position
Lets not get carried away with current prices!
H & W Worldwide Consulting

5. Shipping A bad year with signs of recovery
Much more scrapping needed to gain a recovery
China – now not building bulk carriers, except Valemax
Significant latent capacity remains
Significant possible issues regarding ballast water
New regulations has potential to lift scraping if fully implemented
Recovery in 2018?
H & W Worldwide Consulting

6. India Growth in occurring but slower then predicted
Suffering at current coal prices
CIL unlikely to meet targets – 200Mt import gap by 2020
Can’t make money with imported coal
Outlook for thermal coal weaker then up
Sponge iron recovering – BF closures costs of coal
Modi likely to be re-elected
Summary, targets pushed further out, will not replace China into 2020 or to 2024
H & W Worldwide Consulting

7. Steel and Met Coal session
China
Deep China review – continued trends to late 2017
China not finished yet, much more to build
Continued rationalisation and consolidation
Likely to be a sustained ongoing met coal importer
Indices and Derivatives
Usual debate – not the cause of current prices
Is the benchmark in its death throes, 2017 the end?
Still missing derivatives and liquidity
H & W Worldwide Consulting

8. Steel and Met Coal session
Supply summary
No major expansions in 2017, generally recovery, restarts
Concerns about sustainability, lack of investment, pre- strip and maintenance
Problems post 2018 – lack of new mine capacity
Quality
Some concerns regarding lack of fluidity in the market
Long term prices
Question as to LT prices – far too low, will not allow investment
H & W Worldwide Consulting

9. Power and Thermal Coal session
Demand and Supply summary
Massive de-stocking in 2016
Major moves 2017 to restock
CIL failed to perform 2016 after strong 2015
India Mt, China supply now rising, tight to Q1
Quality
Indonesian mainly low cv – yet to see response
Other
US and Australia supply risks 2017
Competitiveness vs LNG
Europe higher 2017 (nuclear, restocking etc.)
Rising Chinese prices December now Rmb
H & W Worldwide Consulting