A view of China’s coal supply & demand trends

A VIEW OF CHINA’S COAL SUPPLY & DEMAND TRENDS

PHIL REN

VICE PRESIDENT

TADER COAL SCM CO.,LTD

INCREASING EXPORT LEVELS TO CHINA IN 2012 WILL IT CONTINUE?

• The import of coal into china in 2012 increased more than fifty percent over 2011.

• China will be a leading coal importer for a long time.

• The volume China going to import will be different from each year.

2009-2012 import volume

Import volume (Million MT)

Year Jan Feb Mar Apr May Jun

2009 2.99 4.88 5.72 9.16 9.43 16.07

2010 16.08 13.11 15.22 13.52 10.56 12.11

2011 16.56 6.76 9.05 11.10 13.57 13.73

2012 16.37 17.01 17.09 19.87 20.53 22.52

Year Jul Aug Sep Oct Nov Dec

2009 13.89 11.77 12.55 11.14 12.65 16.38

2010 13.09 13.26 15.32 12.32 13.88 17.34

2011 17.53 16.59 19.12 15.69 22.14 21.38

2012 20.21 17.28 14.85 16.80 23.57 36.00

2009-2012 china coal import

Import volume (Million MT)

2009 2010 2011 2012

INCREASING EXPORT LEVELS TO CHINA IN 2012 WILL IT CONTINUE?

• China is a price sensitive market especially for thermal coal, China can produce enough thermal coal to meet customer demands domestically, but if the import coal has margin via domestic produced coal, the customer will be intrigued to buy import coal.

• January-April 2013, China coal import reached 110mm tons, increase 22.42 mm tons compare to 2012, 25.6% increase.

WHAT ARE THE MAIN INFLUENCERS?

1. The international price has to be lower than Chinese domestic price;

only the international price is lower than Chinese domestic price, will the Chinese buyers start to looking offers, biding back and negotiate contract.

2. The ocean freight has to be lower or reasonable; ocean freight is an important factor, it is a major cost factor. 3.Price gap between international market price and Chinese

price has to be wide enough to make money; the Chinese buyers will be very active to negotiate contract

when the gap is large enough.

WHAT ARE THE MAIN INFLUENCERS?

4.. Chinese supply becoming tight or rail constraint.

5.Different supply source and coal quality affects Chinese buyer’s interest of buying and contract negotiation

6. Supply country’s infrastructure also affects Chinese buyer’s ability to buy.

WHAT IS THE FUTURE OUTLOOK FOR CHINA’S COAL DEMAND?

• China’s coal demand will be growing

• China will continue to import coal

• China coal import could reach 400-500 million tons in three years.

1.china’s coal demand will grow

• China’s energy is still heavily rely on coal.

• Hydro almost reaches it roof and affected by weather each year.

• Solar and wind power are a small portion of the total energy consumption.

• China is short of gas supply.

• Coal is more cost effective than other energy in China.

2. china’s coal import will continue

3.China will increase coal import

• China can produce enough thermal coal for its consumption.

• But the imbalance of coal mine allocation and consumption area make it more economic to consume imported coal.

• Transport bottle neck and supply chain safety.

• China is mandate to import met coal.

• World economy.

FORECAST FOR 2013-15-import

• 2013----300-350 MILLION TONS IMPORT

• 2014----350-400 MILLION TONS

• 2015----400-500 MILLION TONS

WHAT ARE THE IMPLICATIONS WILL THIS HAVE FOR Russian coal demand?

• Russia will play an important role as a major coal supplier to China.

• 1. Geography location, Russia and China are neighboring country.

• 2. Good political and economic relations.

• 3. Convenient delivery and shorter delivery period.

• 4. Multiple delivery routes.

WHAT ARE THE IMPLICATIONS WILL THIS HAVE FOR Russian coal demand?

• 5. Right type of coal for China market—both thermal and met coal.

• 6. Obstacles:

• Infrastructure—railway constraints

• port capacities

• weather

• 7. new rail lines being planned.

Coal Supply Chain Management

Intensivism creating values

Tader Coal SCM Co.,Ltd

Brief Introduction of Tader Coal SCM

Tader Coal SCM was established in 1999, restructured into Tader Coal Net

Co.,Ltd in 2007 and renamed as Tader Coal SCM Co., Ltd. in 2010, is a leading

coal supply chain management circulation enterprise in China market.

As a professional coal supply chain management expert, Tader is devoted to

promote coal supply chain in China to intensivism, high-efficiency and

environmental protection.

17

Executive Member of China Fuel Circulation Association

Executive Member of China Federation of Logistics & Purchasing

Member of China Coal Transportation &S ale Society

Executive Member of Liaoning Coal Industry Association

Deputy Chairman of Dalian Coal Logistics Association

Highest Development Potential Company in Dalian

Hi-tech Company

TADER PROFILE

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1 • 2007-2008 Dalian Top-100 Private Enterprise

2

• Best Coal Supply Chain Management Service Enterprise by China

Federation of Logistics & Purchasing

3 • Model Enterprise for Exemplary Labor Relationship of Dalian Municipality

4 • 2009 China Elite Enterprise for Strategy Implementation

5 • 2009 China Corporate Culture Leader by China Enterprise Confederation

6

• Harmonious Enterprise for Exemplary Labor Relationship of Liaoning

Province

7 • 2009 Best Employer of Dalian

HONORS

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Tailored end-to-end

services and product

distribution to

customers by

leveraging dedicated

coal supply chain

management that is

driven by purchase

orders ,plans and

encompasses a full

range of supply

chain components,

including planning,

purchase,

warehousing,

processing and

distribution.

SUPPLY CHAIN SERVICE

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TYPES

Qnet.ar Mt

(％） Aar

（％） Var

（％） St,ar

Objects RANGE

TADER NO.1 5500 5400-5600 <12 <18 >25 <0.8

TADER NO.2

5000 4800-5200 <12 <23 >25 <1.0

TADER NO.3 4500 4300-4700 <14 <26 >23 <0.8

TADER NO.4 4000 3900-4100 <35 <15 >23 <1.0

TADER NO.5 3700 3600-3800 <35 <18 >22 <1.0

TADER NO.6 3500 3400-3600 <38 <20 >22 <1.0

TADER NO.7 3300 3200-3400 <39 <20 >22 <1.0

TADER NO.8 3000 2900-3100 <39 <25 >22 <1.0

Thermal Coal

Tader Coal SCM Business Running Data from Year 2005-2011

Sales Volume (10000 MT),

2005, 71


2006, 120


2007, 231


2008, 586


2009, 876

Sales Volume (10000 MT), 2010, 1000

Sales Volume (10000 MT), 2011, 1200

Revenue (10 Million

RMB), 2005, 27.44

Revenue (10 Million

RMB), 2006, 47.53

Revenue (10 Million

RMB), 2007, 91.04

Revenue (10 Million

RMB), 2008, 288.17

Revenue (10 Million

RMB), 2009, 380

Revenue (10 Million

RMB), 2010, 360

Sales Volume(10000 MT)

Revenue(10 Million RMB)

Tader Supply Chain Network

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QINHUANGDAO

DANDONG

DALIAN

YINGKOU

JINZHOU

JINGTANG

CAOFEIDIAN

RIZHAO

DAFENG

SHANGHAI

ZHAPU

NINGBO

ZHANGJIAGANG

CHANGXING

MEIZHOUWAN

QUANZHOU

XIAMEN

XINSHA

YANGJIANG

GAOLAN

Logistics

Base

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MARKETING NETWORK

LOGISTICS

BASE

1

DISTRIBUTION

NETWORK 1

1

1

1 1

1

1

1

1

JILIN Sales Dept.

LIAONING Sales Dept.

QINHUANGDAO Sales Dept.

JIANGSU Sales Dept.

SHANGHAI Sales Dept.

SHANDONG Sales Dept.

ZHEJIANG Sales Dept.

FUJIAN Sales Dept.

GUANGDONG Sales Dept.

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MARKETING NETWORK

MAKHALINO--HUNCHUN

• Cross-border rail transportation

Thank you

• PHIL REN

• VICE PRESIDENT

• TADER COAL SCM CO.,LTD

• Chairman

• China Coal Importers Association

A view of China’s coal supply & demand trends

Technology

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