Coal Outlook Report

Commodities Research
21 December 2012

PLEASE SEE ANALYST CERTIFICATIONS AND IMPORTANT DISCLOSURES STARTING AFTER PAGE 48
Coal and Freight Quarterly
2014: Bring it on

The story of 2012 will be the story of supply, as coal trade is on track to expand by a
supply-led 82 mt (a 10.5% y/y increase). With every major exporter adding volume,
and the US chipping in an incremental 13 mt, 2012 saw the coal market awash with
supply, and prices duly tumbled. European prices were down 24% over the year,
Australian prices declined 28%, and Chinese prices decreased 30%.
The strong supply side this year has stimulated demand. We expect European takes
to be up by some 15 mt (mostly in the UK and Spain), Indian imports to rise 18 mt
and Chinese imports to increase by an impressive 40 mt y/y.
Looking ahead to 2013 and 2014, the supply side continues to look buoyant with
investments coming to fruition in many of the major exporting countries and
thereby increasing export capacity. In total, we have identified projects that could
add 136 mt of export capacity by the end of 2014 a 15% increase on 2012 trade.
While the supply side could stay robust, the demand side is likely to be less obliging.
We expect reductions in imports to come from Europe (as environmental legislation
results in the closure of some older coal plant and economic growth remains
stagnant) and, more importantly, China, as investments in alleviating domestic
transportation constraints will come to fruition in 2014. We expect the latter to
allow a reduction in Chinese coal imports of some 35 mt in 2014. While India looks
like a country that will continue to grow its imports rapidly, its price sensitivity will
likely keep pressure on prices.
With India increasingly taking centre stage in the coal market, there will be sufficient
demand to continue expanding the trade of sub-bituminous (low CV coal), which is
facilitated by low freight rates. For the next two years, we forecast that freight rates
will remain at low levels.
Given the above, we expect that the coal markets will continue to trade at levels
around the marginal cost of the higher-cost producers, with potentially more
pressure to the downside. We think the levels of cost support in the market are
likely to increase from 85-90 $/t (CIF ARA) currently to 90-95 $/t in 2013, as we are
forecasting oil prices will be 14% higher y/y. Our 2013 average price outlook for CIF
ARA is 95 $/t, 93 $/t for FOB Richards Bay and 92 $/t for FOB Newcastle. Without
the cost price pressure from oil, these price forecasts would be some 6-7 $/t less
given the expected pressure from supply.
Trevor Sikorski
+44 (0)20 3134 0160
trevor.sikorski@barclays.com

Miswin Mahesh
+44 (0)20 7773 4291
miswin.mahesh@barclays.com

Sijin Cheng
+65 6308 6320
sijin.cheng@barclays.com

www.barclays.com

We would like to thank Afonso Campos for his
contribution to this report.
Barclays | Coal and Freight Quarterly

21 December 2012 2
MARKET OVERVIEW
Six things to look out for in 2013 and 2014 are.
Markets being good at creating supply, but bringing some tension as a result. With 2012
a year in which the market was led by the supply side, the next two years seem likely to
be the same as most of the major exporters are targeting y/y incremental sales. We
estimate that the major exporters will look to put in 32 mt more in 2013 and 7 mt more
in 2014. The market is going to continue to be constrained by the demand side, and this
will mean prices will have to work hard to increase demand and/or discourage supply.
China is unlikely to see much growth in its coal imports. Total Chinese demand for coal
is likely to grow, due to underlying economic growth and a return to a more normal
hydro year after a wet 2012. However, that growth will likely be slower as the share of
coal-fired plants in new generation falls and additional stimulus to the economy will
probably be less focused on infrastructure. Furthermore, the growth of imports of coal is
likely to lag that level: the disjoint between domestic and foreign coal prices is unlikely to
be as big this year since domestic prices have already settled lower and domestic
investment in China is focusing on moving coal demand inland, while improving the
ability to move domestic coal around the country. As such, we see broad stabilisation in
imports in 2013 before a fall-back in 2014 to 100 mt.
The level of fuel switching away from gas and to coal in power generation in Europe will
likely fall. In 2012, the two most sensitive markets to fuel switching have been the UK
and Spain, which together have seen coal demand rise by 17 mt in the first 8 months of
the year. While power demand has seen little change y/y, the increase in coal use has
largely come at the expense of gas-fired generations market share. This dynamic
depends on relative prices, and while the gas market has certain downside risks, we
expect prices to be a little higher in the next two years, given market exposure to oil. In
terms of carbon, market intervention is now unlikely before Q4 13, meaning lower
carbon prices for longer. So, 2012 could be a high point for coal imports into Europe but
we would not expect much loss of market share for coal until 2014.
The US shale gas boom will remain a US phenomenon. Interest is increasing in the UK in
shale gas and the December lifting of the shale gas exploration ban suggests the
country is getting serious about using this resource. Having said that, we are unlikely to
see the shale gas volumes necessary to bring gas price to levels that would encourage
fuel switching much before 2017. The US will continue to export coal to balance its
energy surplus until 2016, but we believe that exports will be lower in 2013 and 2014.
We are bullish on oil prices, expecting around a 15% increase in those prices; this would
increase the costs of delivered coal, adding some support to prices. This suggests that
the 85-90 $/t support levels seen this year could translate into a higher support range,
although price pressure from supply leads us to expect that prices will still trend
towards the bottom of that range.
The flight to low quality of the last two years will likely remain, as all of the high-quality
benchmarks have seen reductions in prices but much demand remains price sensitive.
In particular for Indian demand, which is so important without further expansion in
Chinese demand, the call on low-priced coals of reduced CV will remain. Importantly,
the cheap freight that we have seen over the last two years that helps facilitate the trade
in low CV coals is expected to remain.

21 December 2012 3
In terms of the know unknowns, the big one is weather and this introduces risk on both the
supply side (unexpected disruptions) and the demand-side (heating/cooling load, hydro
availability). While there are plenty of other risks, the markets seem likely to trend down to
the marginal cost of the higher-cost exporters and any upside away from this is likely to
come from supply-side disruptions in the major exporters.
FIGURE 1
Global coal price development ($/t)
50
100
150
200
Jan-08 Jan-09 Jan-10 Jan-11 Jan-12
CiF ARA M+1 $/t
FOB Richards Bay M+1 $/t
FOB Newcastle M+1 $/t

Source: McCloskeys, Barclays Research

While weather is always a
random force

21 December 2012 4
BALANCES AND PRICES
FIGURE 2
Global trade balances (mt)
mt 2007 2008 2009 2010 2011 2012F 2013F 2014F
Japan 126 131 113 125 120 132 133 136
South Korea 66 74 80 89 94 94 96 99
China 16 14 58 92 102 142 145 110
India 35 36 60 75 92 110 133 162
Europe 167 165 153 137 158 173 171 169
Others 198 201 186 202 214 211 216 225
Total imports 608 621 650 720 780 862 894 901
Australia 112 125 139 141 147 170 180 186
Indonesia 195 200 233 291 323 337 355 360
South Africa 67 68 67 70 69 74 78 80
Russia 74 70 78 76 81 96 96 96
Colombia 65 69 63 69 76 80 90 94
US 24 35 19 23 34 47 35 25
Others 71 54 51 50 50 58 60 60
Total exports 608 621 650 720 780 862 894 901
Y/Y change (%) 7% 2% 5% 10% 8% 10.5% 4.0% 1.0%
Note: This month sees a rebalancing of our balances which had previously included Vietnamese Anthracite exports into steam coal volumes into China. This has been
removed from both export and import sides to avoid confusion. The arrows show directional change to our forecasts from the last quarterly.
FIGURE 3
Price forecasts
Annual averages Quarterly averages
Benchmarks 2010 2011 2012 2013F 2014F Q1 13 Q2 13 Q3 13 Q4 13 Q1 14 Q2 14 Q3 14 Q4 14
API 2 (US$/t) 93 122 93 95 95 93 97 95 95 96 96 94 94
API 4 (US$/t) 92 116 94 93 91 91 95 93 93 92 91 90 89
Newcastle (US$/t) 99 121 95 92 90 90 94 92 92 92 90 90 88
Note: The arrows show directional change to our forecasts from the last quarterly. Source: Ecowin, Barclays Research

21 December 2012 5
FOCUS: EXPORT COAL
Road to 2014: Making sense of coal export volumes
Despite the persistence of low global coal prices, there are a large number of new projects
due to come online during 2013 and 2014. The majority are announced by the major
exporters, although new participants are beginning to emerge. The projects are a mix of:
brown-field projects which are expansionary in nature, seeking to enhance their efficiency,
takeaway capacity or overall output from existing operations; and green-field additions.
Overall, the projects currently under construction can increase the total production of coal
at the major exporters by some 136 mt/y by 2014, which would translate into a 16%
increase on 2012 exported volumes assuming all new coal is produced and exported.
FIGURE 4
Minimum expected incremental production by 2014
Country Incremental capacity
additions (mt)
Change from
2012 (mt)
Discussion
2013 2014 Total
Australia 32.7 32.7 Most of the additions to productive
capacity to come online in 2014
Colombia 14 15 29 Production instability risks remain.
Indonesia 47 47 Some of these increments likely to be
seen before 2014.
Mozambique 5 9 14 Infrastructure debottlenecking crucial for
further production capacity expansion
Russia 8.5 4.5 13 Production sensitivity to input costs and
high stocks
Total 27.5 108 136
Source: Company reports, McCloskey, Reuters, Barclays Research
The numbers we present indicate a buoyant supply side, with increases in coal prices arising
due to Asian demand having encouraged significant interest in expanding capacity. We
caveat the numbers shown in Figure 4 see below.
The tracking of investments is largely confined to the major exporting countries and
where company data have been used, the major producers. Developments in other
countries and other producers can be important when taken in aggregate.
The market in 2012 has suffered from over-supply and the persistence of relatively low
prices (against costs to port) exist to discourage producers from putting in as much
incremental volume into the market as seen this year. How the low prices influence
producer behaviour, and how much supply response is seen from more mature mines,
will be important in understanding future production patterns.
Large infrastructure projects are usually subject to delays, so some delay to incremental
volumes should be expected. The newer the area where the investments are being made,
and the more difficulty the operating environment, the more important those delays are
likely to be in any given project. Hence, the numbers are potentially biased to the upside.
Most of the major exporting countries are seeing domestic use expand. This could
compete for new production, or eventually could end up limiting the exports of low grade
coals developments that are being discussed in both Indonesia and South Africa. How
the market deals with this, given the sensitivity to price of the buyers, is an issue.
Ongoing investment in coal
supply points to growing
export capacity
although the numbers
are not an expectation of
future volumes

21 December 2012 6
Taking these factors into consideration and given the expansion plans, we are forecasting
that coal trade:
Will expand from most major exporters, but the expansion in volumes of 32 mt in
2013 and 7 mt in 2014 will largely be a supply-led phenomenon. The Pacific Basin
exporters will be among the biggest gainers as increments in Australia and Indonesia
are forecast to be among the largest, and this suggests that the biggest price pressure
will be felt on their benchmarks; and
US exports will likely decline for a variety of reasons, not least as the US is one of the
highest marginal cost exporters. We expect that Colombian volumes will expand into
the gaps left by the reductions in US volumes and that this will help keep a market for
Russian volumes.
We now look at the projects in the individual major exporters.
Australia
Potentially the largest increments of supply through to 2014 could come out of Australia.
Putting this into context, Australia has seen its total seaborne coal exports increase every
year since 2001 (CAGR of 5.2%) and is on track to maintain the upward trend in 2012 again
as its exports have increased 27.98 mt, or 12.3% y/y, over the first 10 months.
In terms of expanding exports in Australia, mining investments come from:
Indias Adani Group, which currently does not produce in Australia but wants to
produce 60 mt/year by 2020. The group is spending USD4.5bn on the project and is
expecting first production of 2 mt to come in by 2014. The company has reported target
average production costs of 60 $/t, suggesting that it will be profitable to export at
Newcastle prices above 80 $/t.
Other projects such as the:
USD$1.3bn Ulan West expansion is expecting to add an extra 6.7 mt/y of annual
thermal coal capacity from 2014 over an eighteen-year lifespan.
Progress on the Ravensworth North project, which is aimed at increasing the output
of both thermal and semi-soft coal by 8 mt/y, starting in 2014.
A finalisation of work at the Caval Ridge operation, which will ultimately supply the
market with at least 8 mt of coking coal, with 5.5 mt of this expected to be added in
2014, despite the project having suffered significant opposition due to labour-
sourcing disputes.
Peabody and Cockatoo are both expanding production as well, and both companies are
expected to add 1.5 mt over the coming couple of years.
Port capacity is expanding as well with NCG port, co-owned by six groups, planning to
increase its capacity from 53 mt to 66 mt by mid-2013.
Despite the expected capacity gains, current export levels in the Basin are causing low prices
with Newcastle prices having averaged 82.4 $/t over Q4 12. Given that pricing, some supply
response is occurring with the more high-cost producers coming under pressure. Australian
producer, Coal & Allied, has announced its redundancy plan, while Centennial Coal has
announced at least 40 layoffs and will be shutting in supply temporarily as it halts some of
its production in January.
Australian export capacity is
leading the way
Although current prices
are low

21 December 2012 7
While supply reductions are possible, there are issues around transportation and port
capacity charges, with coal shippers through the Newcastle (PWCS and NCIG) terminals
reported by McCloskey to have signed up for around 190 mt of export slots in 2013 and 210
mt in 2014. While this covers both steam and coking exports, the 2013 levels represent an
increase of some 50 mt on annualised 2012 numbers through the port. Such an increment
looks unlikely, given the potential lack of that much demand, and will result in producers/
shippers with unused volume allocations racking up port charges against no export
volumes. Regardless, the message is that port and rail constraints are unlikely to be binding
in the coming years, with most producers likely to undershoot against capacity
commitments rather than overshoot.
As with most markets, the level of exports will be highly predicated on price levels, which
will be a function of demand. As such, we see 2013 and 2014 as both having the potential
for additional volumes to come into the market from Australia. We are forecasting that
Australia will put an incremental volume of 10 mt in 2013 and 6 mt in 2014, but highlight
that these numbers are predicated on limited demand. A higher level of Pacific demand
would be met easily with additional Australian supply, and it is Australian exports that we
expect will be most constrained by a pull back in Chinese demand. However, for Australian
volumes to expand with capacity, they would likely need to displace Chinese domestic coal
and that will be more difficult to do given the improved internal transport systems (see
discussion under Chinese demand in this report).
Colombia
The country has been increasing production at an average pace of 8% per annum for the
past eleven years, with mostly positive increments within that timeframe. Over 2012,
Colombian production is likely to fall just short of the revised 91 mt (initial target 97 mt)
level. The labour unrest seen in July and August that disrupted mining and transportation
were key factors in the shortfall. Of the 2012 production, we are estimating that exports will
go up by 3-4 mt to reach 79-80 mt.
Colombia has been targeting a coal production figure of 120 mt/year by 2014, with the
external market being a main destination for those volumes. Reaching that target from
current production levels of around 90 mt suggests 30 mt of incremental production to be
realised in 2014 which would potentially take 2014 exports up significantly beyond the
100 mt/year level. With most of the thermal coal from Colombia being low in both sulphur
and ash, appealing to most buyers and specifically the European utilities, Colombian coals
will likely have ready markets.
New supply capacity is being invested in with a few major projects that are scheduled
dominating, potentially adding almost 16 mt/year by 2014. The projects included here are
outlined below.
The significant expansion of the Cerrejon, the countrys largest mine co-owned by a
consortium of three of the worlds largest producers. The hefty USD1.3bn project is
around 40% complete with work on the site scheduled to be finalised by Q3 2013, and
this will to help the mine produce an estimated additional 2 mt that year. Another 6 mt
is expected as production ramps up through 2014, taking the mines total production up
to its target of 40 mt/y.
The Prodeco project consists of two open-pit mines and is planning to increase capacity
at its collieries by 5.5 mt/y to just over 20 mt/y by the end of 2013. The project is linked
with the construction of a loading port, with the capacity to initially handle 21 mt
annually; which is expected to be ready by Q3 2013.
raising a question on use of
future port bookings
Future volumes could be
constrained by lack of demand
Colombian exports showing
limited y/y growth
but they can do more

21 December 2012 8
A number of smaller-scale projects including the Pacific Coal expansion of the La Caypa
and Cerro Largo mines. The company expects its combined annual output to increase
by nearly 2 mt; from 1.65 mt to 3.6 mt of mostly high specification thermal coal. In a
move to boost exports, Pacific will be lowering its trucking costs by an average of 45%
by changing its port of preference to the Puerto Brisa port; this is expected to be
completed early next year.
The Colombian government is working to increase the countrys ability to supply coal
internationally and has pledged investment in coal export infrastructure. One such project is
the recently announced plan to spend in excess of $390bn to improve the navigability of
one of the Magdalena River, a main transport artery for coal.
While Colombia has a good track record of expanding its production capacity, the labour
unrest of this year and the ongoing civil war with Revolutionary Armed Forces of Colombia
(FARC), suggests the path to expansion has some risks.
We do, however, expect an increase in coal exports in Colombia of 10 mt/y in 2013 and a further
4 mt in 2014. Much of this expansion will be in light of expected reductions in US exports.
Indonesia
Since 2000, Indonesia has continuously increased its total coal (bituminous and other
specs) production, recording a CAGR of around 18% over that time. The countrys exports
of bituminous coal have tripled from 53.8 mt in 2000 to around 172 mt in 2011. However,
2011 was the first year that bituminous coal exports decreased y/y, as the prevailing high
prices for coal drove increasing interest in its plentiful production of lower grade, sub-
bituminous (sub-bit) coal. The trend to greater exports of sub-bit has been growing for a
while and since 2005 the country has increased its exports of sub-bituminous material by
over 40% annually. In 2012, we estimate that total coal exports from Indonesia will grow by
17 mt, but that sub-bit volumes will now account for over 50% of the total, compared with
47% in 2011 and 38% in 2010.
Following on from a rapid period of expanding exports, planned production expansions are
limited to:
Bumi, the worlds largest exporter of thermal coal, is increasing production at a variety
of its mines by 48% to 114 mt in 2014, from around 77 mt today; and
Berau is targeting an increase of its sub-bituminous production capacity. The company
is looking to increase its production by 50% from 20.13 mt in 2011 to 30 mt in 2014.
FIGURE 5
Indonesian production by selected mine (mt)
2012 (mt) 2014 (mt)
Mine Capacity Production Capacity Production
KPC 51 45 75 65
Arutmin 33 30 40 35
FBS 3 2 12 10
Pendopo 1 0 7 4
Total 88 77 134 114
Source: Company Reports, Barclays Research
With Indonesian producers benefitting from among the lowest costs in the world, the
appetite, particularly for the low-graded coal, will still exist. While sub-bit prices have fallen
along with the benchmark prices, some regulatory issues facing the Indonesian sub-bit
and provided civil issues are
limited, they likely will
Indonesia has expanded more
than most countries
and will likely continue to
benefit from low average costs

21 December 2012 9
market remain. Although the imposition of taxes on exports remains more of a question than
a certainty, there is also the possibility that royalties will increase in the next two years from
3-5% to around 13.5%. As royalties increase, the costs of Indonesian exports will rise and
market share could be lost to other producers, particularly South African sub-bituminous.
While the investment is there, the regulatory environment in Indonesia will likely continue to
pose the major risks. In particular, any limits on sub-bituminous exports, which are now
more than half of Indonesian exports, would constrain these volumes considerably.
We are forecasting that Indonesian volumes will increase by 14 mt in 2013 and 18 mt in
2014, largely driven by an expansion of sub-bit demand from India.
Russia
While Russia produces a large volume of coal, domestic consumption levels means that it
exports roughly one-third of it every year. Of total coal exports, steam coal accounts for
around 80% of total volumes, while the rest is coking. Even though data remain sketchy,
Russia looks like it will also be adding production capacity in the coming two years.
Production projects are outlined below.
SUEK (27% of Russian coal production, 27% of total exports in 2011), which is looking
to increase its exports of coal by 10-15 mt/y over the next five years, while investing
some RUR100 billion. Even though increments for individual years have yet to be
announced, the company states that increases will be in line with the development of
rail and port infrastructure. With this likely to be a gradual process, we look for only
small growth from SUEK in the next two years.
Kuzbassrazrezugol, or KRU, (14% of Russian coal production, 22% of total exports in
2011) is stepping up its efforts in topsoil removal at its locations, although it does not
disclose specifically how much incremental supply it will produce in the coming years. It
expects to see incremental production in 2013, mostly from steam grades.
Mechel (7% of Russian coal production, 4% of total exports in 2011), the countrys
fourth-largest exporter, is looking to increase production by about 10.5 mt (33%)
through 2014 to 41 mt. The increments in production are 8 mt in 2013 with another
2.5 mt in 2014. The company produces a mix of coal specifications, which should leave
it well placed for changes in market trends; about 48% of this is coking material, 38% is
steam coal and the rest is others. Mechel has cut its 2012 target by over 13%, to 30.5 mt,
in response to the more moderate takes of coal in H2 12.
Two of the issues around further production is reports of high coal stock levels at mines and
ports and the relatively high price of Russian coal to port. Given its relatively high cost base
for exports with transportation costs to port being around 55% of the total cost of sales,
Russian volumes will be among the first to be affected by coal price reductions, and will find
it harder to compete for market share against some of the lower-cost producers. The
challenges to expand imports given the lack of major export projects currently being
advanced, and particularly against a wider environment of higher oil prices, suggests
incremental volumes from Russia in the next two years will occur only if there is a surge in
the global demand for traded coal.
We note other developments in Russia, including the addition of in 10 mt/y of added export
capacity into the Vostochny port, but this is not forecast to come on line before 2017.
As such, we are forecasting that for the next two years, Russian export growth is likely to be
modest, and to experience flat exports in 2013 and 2014.
But limits on sub-bit exports
would be a problem
Russian expansion is less
well defined
while port expansions seem
to be a way off

21 December 2012 10
North America
For 2013 and 2014, the issue on US volumes is less about investments to increase capacity
and more about whether the following factors do/do not prevail.
An up-tick in domestic coal burn as coal recaptures market share in power. For this to
occur, there needs to be a change in relative prices, with gas being made more
expensive in 2013 than in 2012, thereby improving domestic demand. US gas prices
have been on an increasing trend over the second half of 2012 and by the middle of
December prices were back to the 3.5 $/mmbtu level. With our US gas prices forecast to
be 3.25 $/mmbtu in 2013 and to reach 4 $/mmbtu in 2015, coal plant will regain some
market share. We expect domestic coal burn to increase by 7% at least.
If export prices stay high enough to encourage coal exports. In terms of the viability
of exports:
API-2 prices, which have come back from lows around the 85 $/t level to trade
above the 90 $/t level. With the curve staying around these levels as well, 2013 is
not likely to see much in the way of the 100 $/t contracts that characterised much
of Q1 and supported good volumes in the market. While coal exports should still be
profitable at +90 $/t;
Domestic freight rates, which have seen more supportive developments as CSX, the
main east coast rail line operator, introduced a proposal to index rail charges for coal
exports onto the API-2 price in the month the coal is being shipped plus a fuel
surcharge. While the exact proposal was not made public, McCloskey reported that
the index value could be 15% of the API-2 price plus 2 $/t surcharge on the rates. If
the API-2 price is 90 $/t, then this would lead to a 15.5 $/t charge. In context, 2012
shipment tariffs quoted earlier in the year were 39-56 $/t, although prevailing rates
are now put at around 19 $/t by McCloskey. A reduction in rail charges to these
levels would help keep US coal to be more competitive in the export market; and
International shipping rates remain depressed and are unlikely to see much increase
in the coming two years. This is a mixed blessing for US coal, which has a shorter
distance to Europes ARA ports than Colombian or South African volumes.
Reductions in domestic coal production are likely to occur, with a number of announced
reductions likely to be increasingly felt through 2013.
A shorter-term issue, but one likely to affect Q1 13, is the navigability of the Mississippi
River, which has very low river levels due to a hot dry summer in the region. Given the low
levels on both the river and in dams, here river authorities are scaling back the release of
water on the Missouri River, which will affect downstream flow into the Mississippi. This will
affect barge shipping of coal to gulf export terminals, and with river levels now unlikely to
improve until Q2 when the spring run-off occurs, Q1 exports could be affected.
Last, US domestic stocks still remain high but have been decreasing, with August numbers
around 17 mt above the five-year average, but some 25 mt lower than the peak of stocks
seen in May of this year.
Given the above, we are forecasting that total exports from the US will be down 12 mt in
2013 and by another 10 mt in 2014.
South Africa
In South Africa, expansions are less on the production side and more focused on expanding
rail capacity to allow fuller utilisation of existing mines.
US Stocks lowering as
production eases
South Africa focusing on
rail issues

21 December 2012 11
While rail constraints have been an important constraint in the past, we note that the main rail
operator, Transnet, has the capacity to move around 6.3 mt of coal per month (or 76 mt/y),
but thus far the capacity has been underutilized, with railings to the Richards Bay Coal
Terminal (RBCT) averaging 5.7 mt (or 68 mt/y). So, even without further expansion South
Africa could support increased sales of around 8 mt.
Rail operator Transnets capacity is set to expand:
Through its current plans to increase export railings from around 72 mt this year to 81 mt by
2014, due to an expansion of the fleet and other infrastructure investment. It is creating a rail
link to the Swaziland network which will allow it to divert other freight away from the main
coal artery, thereby helping it to increase capacity by a further 5-6 mt by Q1 2016; and
Plans to build its own coal terminal at Richards Bay, ostensibly to facilitate exports for
smaller mining companies and new market entrants. At present, the existing Richards
Bay Coal Terminal handles output from established mining companies. The new
proposal will facilitate those miners which are currently facing difficulty in accessing
export capacity and have had to otherwise restrict their production levels. Transnet has
planned to build the open access terminal with export capacity of 14 mt initially, with
plans to expand it to 32 mt if required. However, this is still at early stages and we would
not expect it to swell capacity in the next two years.
Despite the lack of major expansion on the table in the next two years, we expect that South
Africa will provide good supplies to the market next year, with an incremental increase of
5 mt in 2013 and 4 mt in 2014, taking total exports to 80 mt by the end of that year.
In terms of risks, the mining sector continues to be vulnerable to labour unrest so there is
potential downside to these numbers. With India being its single largest customer, we
expect that the demand for below-benchmark grade coal will grow. Also, given tensions
around the export of that volume, any move to rein them in would damage South Africas
ability to increase its exports.
New exporter: Mozambique
Coal projects in Mozambique have been developing, taking advantage of the countrys
largely untapped coal reserves and relative proximity to markets, such as India. In Figure 6,
we outline the major coal projects that are under development in the country.
FIGURE 6
Coal mining and export projects in Mozambique
Company Project Size (mtpa) Timing Discussion
Vale Moatize 2.6
5
11
2012
2013
2014
2012 numbers down due to lack of rail capacity to port. It is expected that
upgrades to this route will allow the expansion of capacity. 70% of tonnage
is coking coal, 30% is steam. Vale believes it could take its capacity to
around 22 mt in the future, although these are not firm expansion plans.
Beacon Hill
Resources
Minas Moatize 0.6
1.2
4
2012
2013
2014
The company still needs to finish its financing needs and secure rail
allocation, without which, the supply would be essentially shut in.
Anglo-American
Talbot
Revuboe 8 2015 (at the
earliest)
The government has not yet awarded the licence and the project has been
delayed until at least 2015, The project was expected to have an output of
around 8 mt of, 3 mt of those to be thermal, while the rest would be high-
spec coking coal for the steel industry.
Source: Barclays Research
Although it could do more with
existing infrastructure
Some downside risks, including
limiting sub-bit exports

21 December 2012 12
Despite the interest in Mozambique, a number of issues still need to be resolved, including a
lack of existing infrastructure to facilitate exports, making projects more complicated. Also,
with the mining industry in its infancy, the broad support networks of trained staff and
experience with managing the logistical chain of coal exports is missing. While such barriers
will be surmounted, this takes time and we continue to expect that the level of exports into
the market from Mozambique will be increasing but limited.

Mozambique exports to be
limited over the next two years

21 December 2012 13
COAL BENCHMARK PRICES: OVERVIEW AND OUTLOOK
Coal benchmarks: Flat lining
Having fallen for most of the first four months of 2012, the global coal benchmark prices
have generally traded in range for most of the second half of the year. Since May 2012, CiF
ARA M+1 has traded in a 85-96 $/t range, and at around an 89 $/t mean. Tellingly, Jan 13
coal was trading around the 92 $/t, suggesting that the market sees little upside to prices
this winter, while pointing to a further period of range-bound trading. Atlantic Basin prices
improved moderately over H2, with the strikes in Columbia removing some volumes, while
a cold Q4 helped to stimulate some more demand.
Similarly, most of the other global benchmarks have established a sideways range, although
Richards Bay (South Africa) has traded in a wider range since May, with RB FOB M+1 trading
with a mean of 87 $/t, but in an 80-102 $/t range. The wider range reflects some of the
greater volatility that has moved the Pacific Basin coal market this year. Newcastle
(Australia) FOB M+1 traded similarly to RB, with an 87 $/t mean and a 78-100 $/t range.
Both of these were back-trading just above their means in December, reflecting some of the
better buying for coal that was apparent in a Q4 that was colder than the previous year.
Chinese FOB prices of the Bohai Rim (Northern China) declined and saw more correction
over H2, which helped to bring prices in line with imported coal. The M+1 prices traded at a
124 $/t mean and in a 115-145 $/t range, with a strong Q3 price correction pointing to a
trend reduction over this period. By December, these prices were trading towards the
bottom of their range at 116 $/t.
FIGURE 7
M+1 steam coal price benchmarks
14 Dec
2012
14 Jun
2012
3 Jan
2011
6 month %
change
One year %
change
ARA CIF (Europe) 91.3 85.9 109.2 6% -17%
Richards Bay FOB 87.1 84.8 103.9 2.7% -17%
Newcastle 6,300 Kcal/kg GAR FOB 87.9 88.9 111.4 -1.2% -21%
Bohai Rim FOB 5,500 Kcal/kg NAR 116.7 140.2 151.7 -17% -23%
Source: Ecowin, Barclays Research
FIGURE 8
Evolution of steam coal benchmarks (M+1)

FIGURE 9
European forward prices (CIF ARA, $/t)
50
100
150
200
Jan-08 Jan-09 Jan-10 Jan-11 Jan-12
CiF ARA M+1 $/t

80
86
92
98
104
110
116
122
Sep-12 Dec-12 Mar-13 Jun-13 Sep-13 Dec-13
14/12/2012 02/01/2012 14/06/2012
Source: Ecowin, Barclays Research Source: Ecowin, Barclays Research
Benchmark prices stayed
low, underlying well-supplied
markets
Sideways trading dominated H2

21 December 2012 14
European coal contango
In terms of the monthly contracts, the M+1 M+2 contango levels are trading in the middle
of December at around the -2 $/t levels for January coal, which is above the yearly average
of around -1 $/t. The contango is reflecting some buying given the colder Q4 seen this year,
although we do not really see much more mileage in that spread without another bout of
cold weather coming into the market.
Of more interest, the M+1 Y+1 has come in and is now trading around the 6 $/t level,
lower than the 10.5 $/t over which that spread has averaged for the year. While the very big
numbers seen early in 2012 have largely been eroded, they suggest that greater producer
volumes are being put into some of the longer-dated contracts. While the still-wide
contango levels point to a well-supplied prompt, the remaining good value on the further
ahead curves should still allow volumes from the more expensive marginal producers to
continue to be sold into the market. The contango is even more interesting when the
prompt prices are compared with the Q4 13 prices, with that spread being out at the 10 $/t
level. That level of contango will likely come in and the structure of the curve suggests that
producers hedge over a much more limited time horizon than the European utilities. As we
get nearer to delivery, we would expect the producers to become more active with putting
volume into those contracts and for the premium of those future-dated contracts to begin
to come in.
The curve does look structurally in contango though, and the Y+1 to Y+2 spread has stayed
around the -9 $/t level across the last quarter. As outlined above, we think that this reflects
a lack of liquidity in the far-dated contracts, particularly as all of these are suffering from a
liquidity squeeze, given recent regulatory and credit market developments. We could see
some modest further widening, particularly if as we expect, utilities start to hedge more
power backed by coal out in 2014, but that is a strong call given the current contango.
FIGURE 10
M+1 M+2 price differentials (Cif ARA, $/t)

FIGURE 11
M+1 Y+1 price differentials (Cif ARA, $/t)
-8
-6
-4
-2
0
2
4
6
8
Jun-10 Dec-10 Jun-11 Dec-11 Jun-12 Dec-12
M+1 - M+2 (Cif Ara, $/t)

-20
-18
-16
-14
-12
-10
-8
-6
-4
-2
0
Feb-11May-11Aug-11 Nov-11 Feb-12May-12Aug-12 Nov-12
M+1 - Y+1 (Cif Ara, $/t)
Source: Ecowin, Barclays Research Source: Ecowin, Barclays Research
Price differentials
Europe CIF - South African FOB
After a period around May and June where South African FOB was priced at a premium to
the European delivered prices, a subsequent re-pricing for FOB RB has put it back to a
discount but the spread has stayed in the non-arbitrage channel where FOB RB does not
price into Europe at spot.
Contango is more modest
Contango more interesting
with the far-dated contracts
Further widening is a big call
FOB Richards Bay priced out
of Europe

21 December 2012 15
Given that the differentials have been trading in the non-arbitrage channel for the better part of
the last two years, the main take-away is that the two prices now bear very little real relationship
to each other. With Europe tending to balance with supply from other suppliers (Colombia,
Russia, and the US), while South African volumes are predominantly called on by Asian buyers
such as India (30% of South African volumes this year) and China and Taiwan (together, 26%).

FIGURE 12
CIF ARA - FOB Richards Bay ($/t)
-20
-15
-10
-5
0
5
10
15
20
Mar-11 Jul-11 Oct-11 Feb-12 May-12 Sep-12
API 2 - API 4 ($/t) Arb into Europe ($/t) Arb out of Europe ($/t)
Source: Ecowin, Bloomberg, Barclays Research
The relationship between Richards Bay and Newcastle prices has been variable has traded in
a fairly narrow range over the first eleven months of 2012, averaging -1.4 $/t, but trading in
a 6.7 to -14.4 $/t range. The start of the year saw Newcastle trading at those strong
premiums, as good Chinese demand drove high demand for the Australian coal. However,
as China began to slow down and Chinese prices started adjusting to lower demand and
growing inventories, Newcastle prices came under pressure. By early December, RB FOB
was trading around a 2 $/t premium to Newcastle, effectively pricing RB out of the far-
Eastern markets, and pushing more of those volumes into India.
The bit sub-bit spread: Australia and Indonesia
The spread between off-specification (lower CV) coal prices in Australia and Indonesia and
benchmark (higher CV) coals showed considerable volatility over the year. The only clear
pattern seemed to be that peak coal demand periods, such as winter and high summer,
corresponded to the peaks of the premium for the benchmarks, while off-peak demand
periods (spring, autumn) saw the premium reduce.
The differential between FOB Newcastle 5,500 kcal/kg NAR and FOB Newcastle 6,300 kcal/kg
GAR, on an-adjusted CV basis, went from periods of strong premiums for the benchmark to
discounts in the shoulder months. From the price relationships, we note the following points.
There are periods where high CV coal is at an energy content discount to the prices paid
for low CV and that points to a level of sensitivity to absolute prices by many buyers. In
some countries, buyers are sensitive enough to prices that they would still rather pay for
the lower-priced coal, even if they get less energy per $, than pay for the coal that is
more expensive in absolute terms, as that may be all that they can afford.
The periodic, somewhat seasonal discounting of the benchmark grades coincides with
lower demand periods when benchmark volumes need to increasingly compete for
market share against the low-CV coal. With low CV coal having seen demand stay
buoyant, those prices fell slower as the benchmarks chased the market downwards.
With South Africa looking east
for demand
RB and Newcastle trading
together
Off-spec and on-spec
Australian differentials have
narrowed and widened

21 December 2012 16
The relationship between the two sub-bit markers have been much more consistent and
largely reflect the freight differentials between Indonesia and Australia.

FIGURE 13
Spreads between off-spec and on-spec coal CV adjusted ($/t)
-5
0
5
10
15
20
Apr-11 Jul-11 Oct-11 Jan-12 Apr-12 Jul-12 Oct-12
Newc (6300) - Indonesia (5000)
Newc (6300) - Newc (5500)
Source: McCloskey, Barclays Research
By December, the discounts for sub-bit coal were around the 6 $/t level (NEWC against
NEWC), while the freight differentials between the two exporters was around the 5 $/t level.
Price outlook, forecasts and trade recommendations
Atlantic basin
The Atlantic Basin is looking reasonably well balanced in 2013 and 2014, with the expected
increases in Colombian and Russian volumes likely to be reasonably offset by reductions in
US volumes. While we think there are a number of factors driving the latter, modest pricing
will be needed to ensure that an incentive is not provided to bring those volumes back into
the market. With European demand likely to see only modest reductions from the 2012
peak levels, the European market will rely on Colombian, Russian and US volumes for
supply, but the rebalancing between the exporters will be needed given the expected
pressure we see in the Pacific Basin.
The outlook is for prices to stay in range, not straying too far from the marginal costs of the
higher-cost US and Russian exporters. Apart from a supply outage, the main upside price
pressure will come from an underlying movement upwards of the marginal cost of the key
exporters. With our crude prices forecasts for a 14% y/y average increase, we expect that
this will increase the cost floor from 85-90 $/t to around the 90-95 $/t level. We note that
the oil prices are not expected to climb until Q2 13 and thus impacts on the cost floor are
likely to be more pronounced in the second half of the year.
Our forecasts are for:
CIF ARA prices for 2013 at 95 $/t (up 2 $/t on our last forecast) on a combination of
similar fundamentals, but reflecting the impact of oil-driven costs on price support levels.
Without the increase in oil prices, our CIF ARA price forecasts for the year would be 89 $/t.
With 2014 looking even more unbalanced in terms of potential supply surplus, our CIF
ARA forecasts stay at 95 $/t, which points to a movement towards the bottom of the price
support range, given the continued increases in oil prices expected that year.
Atlantic Basin reasonably
balanced
Oil cost-driven pressures
suggest only upside

21 December 2012 17
Pacific Basin
The Pacific Basin looks more unbalanced from a supply situation with targeted expansions
out of Australia, Indonesia and South Africa coming up against flattish y/y Chinese exports
and growth only in price sensitive India. In 2014, the supply story is even more pronounced
while an expected reduction in Chinese needs for imported coal could cause considerable
chaos in the market. Given this background, we are forecasting:
FOB Richards Bay for 2013 price forecasts are 93 $/t (up 1 $/t from 92 $/t) for 2013 on
the same logic. For 2014, we expect that prices will be 91 $/t in 2014 as the fall out
from reductions in Chinese import levels falls heaviest on Pacific Basin exporters. The
continued appetite for low spec coal in India is likely to keep the pressure on the South
African benchmark coal prices. In the absence of the oil price pressure, our forecast
prices for FOB RB would be 87 $/t. We do expect given an emerging supply imbalance
in the Pacific Basin that RB prices will trade on average at a discount to CIF ARA.
FOB Newcastle prices will be the lowest of the three, at 92 $/t in 2013 and 90 $/t in
2014. The low 2014 prices against the countervailing cost pressure points to the intense
competition we expect to see between Australia and Indonesia for reducing demand out
of China.
Trade recommendations
Given our expectation is fundamentally bearish, but with some oil-driven cost support
resulting in prices only gradually trending upwards, we see good reasons for looking at the
high levels of contango in the curve. One of our existing trades looks for a widening
between contracts expiring in CIF ARA December 2013 and 2014. We recommend that this
trade, which is currently delivering gains of 10%, is held. Another trade is more an outright
trade, and Q4 13 trading at 100 $/t looks over-priced against our expectations. We think
the structural contango in the market, given the difference between when utilities hedge
and when producers put volume in the market, opens up opportunities. Here, we
recommend an outright short is taken.
FIGURE 14
Coal market trade recommendations
Trade Opening price level
20 Sept 12
Price level
18 Dec 12
Rationale
Previous trade
CIF ARA:
Sell Q4 12
Buy Q1 2013
Dec 12 = 89.1
Q1 13 = 92.3
Dec 12 = 90.5
Q1 13 = 93.5
The trade closed at a loss of 6% as the contango narrowed from 3.2 $/t to 3
$/t as while it was cold, it was not cold enough to drive enough of a difference
between the two contracts.
Previous trade
CIF ARA:
Buy Dec 13
Sell Dec 14
Dec 13 = 96.5 $/t
Dec 14 =105.15
Dec 13 = 96.6
Dec 14= 104.7
The contango narrowed from 9 $/t to 8.1 $/t, providing a return of 10% on
the trade. We still expect further narrowing as we go further and so still
recommend that the trade is held.
New trade
CIF ARA
Sell Q4 13
100 $/t An outright short as this contract seems to be over-priced and over-bid against
the volumes producers are happy to put in the market at the further end.
Source: Reuters, Barclays Research
Pacific Basin seeing plenty
of supply
Directional trades difficult but
contango looks too wide

21 December 2012 18
THE GLOBAL COAL MARKET: FUNDAMENTALS
2012 will be remembered as a year that has been very good for the supply side of the coal
market, with exports from all the major exporters up 14% y/y over the first seven months.
The rise of global exports was seen across basins, and we estimate that the 2012
increments will come from the:
Atlantic Basin, from Russia (15 mt, up 19% y/y), the US (13 mt, up 38%), and Colombia
(4 mt, 5%); and
Pacific Basin, from Australia (23 mt, up 16% y/y), Indonesia (17 mt, up 5%) and South
Africa (5 mt, up 7%).
Demand for exports has not exactly stopped accelerating. However, the increments in
supply from all of the key exporters were against a background in which additional demand
for seaborne had to be stimulated by the steep reduction in benchmark prices seen in the
first half of the year. With supply staying robust through H2, benchmark prices were left
trading in their low ranges, at times dipping to the price levels at which supply from the
higher-cost exporters was being challenged.
FIGURE 15
Incremental growth in exports (mt)
-10
-5
0
5
10
15
Jan-11 Apr-11 Jul-11 Oct-11 Jan-12 Apr-12 Jul-12
USA Colombia South Africa
Russia Indonesia Australia

While exports were robust, demand was good with 2012 seeing:
European coal consumption now forecast to be up 12 mt y/y, with most of those gains
coming out of the UK and Spain, as lower-priced coal was aided by low carbon prices to
help push gas out of merit in those countries. With gas never being in merit in most of
the continental markets, it was the loss of LNG to Europe, combined with the healthy
coal supply, that made the difference; and
Asian coal consumption leading the way, with:
China now forecast to see increments of 40 mt y/y (a 40% increase), as low-priced
benchmarks price themselves into a Chinese domestic market that was still
experiencing periodic constraints on moving domestic coal around, and a low hydro
year. While the slowdown in economic growth slowed the pace, this is still a very
significant movement upwards in imported volumes;
2012 has been the year
of supply
Everything up in the Atlantic

21 December 2012 19
Indian growth now forecast at an incremental 18 mt y/y, ie, very healthy and
reflecting the continued expansion of power generation capacity. While there have
been issues around the Rupee depreciation, this has mostly led to Indian buyers
continuing to buy sub-bit coals, with India buying 38% of Indonesias sub-bit exports;
Japan posting a 12 mt y/y gain, as the post-Fukushima energy shortage continues to
draw in more thermal energy sources.
The 2013 and 2014 coal market looks likely to expand less sharply in the next two years,
despite plenty of new supply capacity expected to coming online in that period (see
discussion in the focus section of this report) is likely to run into a lack of demand as there
are forecast reductions in coal demand in:
Europe, given the combined impacts of little growth in industrial production and further
environmental legislation; and
China, given better hydro expected and the forecast fruition of investment to alleviate
domestic transportation constraints. We forecast that around a 35 mt reduction in
imports will be needed in China in 2014.
With only India looking to be an engine for growth, the market will have to rely on prices
being low enough to help to lock in some production.
Export supply: Still rocking
Atlantic Basin supply
Colombia: Momentary pause
In H1 12, Colombian exports were up 5.2 mt y/y (15% y/y) and looked set to continue to
increase. A 25-day rail workers strike disrupted supplies, and pushed July exports down 0.6
mt m/m and 0.9 mt y/y and August exports down 1.8 mt. Since then, y/y increments have
come back, but to a smaller degree than we saw in H1, meaning that over the first four
months of H2 Colombian volumes are down 1.9 mt y/y. To the end of October, in terms of
destination of exports:
Europe accounts for 73% with 47.6 mt of coal coming in, which is 3.0 mt higher y/y;
Latin America accounts for 22%, with 13.8 mt being sold, although this represents a y/y
reduction of 1.9 mt to the region; and
Asia accounting for 6%, up 2.1 mt y/y to 4.1 mt, with the largest volumes being sent to
China (1.9 mt) and Korea (1.3 mt). Almost no additional coal has been exported to Asia
in H2.
A key reason for the weak H2 in Colombian exports centres on social issues, ie, either labour
disagreements or the periodic attacks on infrastructure as part of the long running civil
insurgency in that country. In early September, the large producer Cerrejon released a
statement that the railroad connecting its mine to its coal export port on the Caribbean
coast had been attacked for the second time in a month. Although this had a minor
disruption on exports, clearly Colombia would have added greater volumes into the market
without the supply disruptions.
We are forecasting that over 2012, Colombian exports of steam coal will come in at 80 mt,
up 4 mt y/y.

Normal service resumed after
the July strike
Supply disruptions happened,
leaving Colombian
increments low

21 December 2012 20
US: a big change
2012 will likely be the year of the US exports, with these adding 14 mt more thermal coal
into the market by the end of September a 60% increase y/y.
The growth in US exports was driven by low power demand for coal due to both:
US thermal generation in the first 9 months of the year was down y/y by 221 TWh
(16%); and
A change in relative prices, with US gas seeing prices as low as 1.91 $/mmbtu, and
averaged 2.78 $/mmbtu over the first 11 months of 2012, compared with an average of
4.1 $/mmbtu in the same period in 2011. Given this, US coal-fired generation in the first
9 months of the year was down by 220 TWh (16%) ,while natural gas-fired generation
was up by 201 TWh (26%).
The result was that coal consumption in power generation was down by 107 Mst in the first
nine months of 2012. In response to the pushing out of coal from the US merit order,
production reductions eventually followed, with coal production being down 65 mst (6.5%)
by the end of November.
The other avenue for the coal not being used in power was exports, and of the total 37 mt
y/y exported by the end of September, 64% went to Europe, and 25% to Asia. Given the
current rate of exports, we expect 2012 exports will reach 47 mt a 16 mt y/y increment.
FIGURE 16
Colombian exports (y/y change)

FIGURE 17
US exports (y/y change)
0
1
2
3
4
5
6
7
8
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
2010 2011 2012

0
1
2
3
4
5
6
2010 2011 2012
Source: McCloskey l, Barclays Research Source: McCloskey, Barclays Research
Russia: Raising the game
Over the first ten months of 2012, Russian exports of coal were reported by the Ministry of
Energy as being up by 18% y/y, with incremental steam coal volumes up by around 14 mt
a very good performance by Russian coal, which took advantage of the strong European
demand seen this year. Exports were reasonably strong throughout the year despite periods
where European delivered coal prices traded as low as 85 $/t, a challenging price level to
sell in Russian volumes. However, prices along the 3-6 months out curve never fell below
the 90 $/t level, allowing Russian volumes to be comfortably sold into the market
throughout the year.

US volumes strong throughout
Pushing volumes in

21 December 2012 21
South Africa
In 2012, South African coal exports have achieved an annualized rate of 74 mt , slightly
below our expectations of 76 mt. This represents a growth of 8% y/y, although this annual
growth rate hides that RBCT coal exports:
Were higher y/y by 4.6 mt (17%) in H1 2012; and
In the first five months of H2 dropped by 0.48 mt y/y (or a 2% reduction).
The reduction is largely due to:
A series of strikes in the mining and transportation sector during this period. Railing data
to RBCT indicates that deliveries to the coal terminal were up by 15% y/y in H1, while in
H2 this is falls to a 2% y/y; and
Less enquiries for South African coal as global coal demand slowed its growth rates in
2012. Even with the slower growth in railings, the inventory data at RBCT suggest a
surplus in H2 building at a faster-than-seasonal pace. Since the end of H1, coal
inventories at the terminal built by 0.8 mt to 3.7 mt.
In terms of pricing in the international market, South African coal continues to face difficulty
pricing into Europe at the prompt given the unattractive price differentials. With the CIF ARA
FOB Richards Bay differential averaging -0.6 $/t and the freight rate from Richards Bay to
Europe averaging 9 $/t through this year, there were few opportunities for prompt cargoes
to price into Europe without a discount applied to the benchmark. As a result, South African
exports of steam coal to Europe have fallen by 2 mt/y, down to around 10 MT for the year.
And the competition in the Pacific is heating up, with traditional sources of supply
(Indonesia and Australia), as well as suppliers from the Atlantic Basin (Colombia and the
US). In terms of the direction of South African coal exports, India continues to increase its
markets share, within the pool of its customers. Indias share of South African bituminous
exports in the year-to-date is 30% compared with the 27% averaged in the same period in
2011. China has also seen a similar basis-point increase in the share of South Africas steam
coal customer base, increasing from 14% to 18% in 2012.
Looking forward we see similar trends continuing to hold for the direction of South Africas
coal exports, with Europe being more reliant on Russia, Colombia and the US for its supplies.
Pacific supply
Indonesia: Slowing down
Of all the exporters, Indonesian data are the most lagged with a full set of data only available
up until July. Across the first seven months of 2012, exports increased by 10 mt, or 7% y/y.
While this is well below the growth rates seen in the previous years, the growth still is
considerable given the high basis on which they were being measured and reflects the
continued investment in the sector that has been made. With Australian coal exports
staying firm through most of the year, we expect that this will extend to the Indonesian
numbers and are forecasting that 2012 numbers will come in at 340 mt a 17 mt increase
on 2011 export numbers.
One of the highlights of the Indonesian data is the expansion of the sub-bit exports (101 mt),
with these exceeding the export of bituminous coal (89 mt) for the first sustained period on
record. The market for sub-bit has been sustained despite periods where that material was
more expensive than the benchmark coals on a CV adjusted basis. The key markets for the
sub-bit material were India (38% of total sub-bit exports) and China (22%).
SA volumes up 8% y/y
Pacific Basin competition
is an issue
Indonesian coal exports
remained robust in 2012
With sub-bit leading exports

21 December 2012 22
The lack of much H2 data for Indonesia does raise some questions over exactly where the
volumes are going. Issues to consider include:
In response to the adjustment of Indonesian prices across all of H2 to an average of 60
$/t, the Indonesian Coal Mining Association had cut its 2012 forecast of production by
about 50 mt, from a 395 to a 345 mt mid-point level, as companies such as Adaro and
Berau adjusted production targets. While this could moderate export volumes, major
producers like Bumi have announced they were maintaining coal production levels, but
being careful to match grades to demand a reference to the fact the market is still
there for sub-bit coals, particularly from India.
The continued strong expansion of Australian volumes in the second half of the year is
somewhat at odds with the more modest performance of South Africa (strike affected)
For the remainder of the year, we expect Indonesian coal producers to maintain exports
around current levels. Given the ramp-up seen in H2 11, this means fewer additional
incremental volumes will be put in but that y/y increments will stay around 14 mt for the year.
Australia
Over the first ten months of 2012, Australian exports of thermal coal were up 19.6 mt y/y
(16%) to 139 mt, with incremental sales being seen in every month apart from August.
Australia remains the key exporter to Asia with its exports being focused on: Japan (45% of
its thermal volumes), China (19% of total), Korea (17%) and Taiwan (10%). Other locations
outside these four only accounted for 9% of total Australian thermal coal sales.
The strong growth in Australian exports has been driven by large port infrastructure additions
including the 30 mt of export capacity in 2012 that the Newcastle port added. With other
capacity additions on the way see the focus piece we do think that demand is going to be
the key constraining factor on Australian export growth over the coming two years.
Export demand: Still very competitive
Macroeconomic outlook
EU
The euro area is set for another year of weak economic activity, and differences across
countries are likely to remain significant. Our economists expect growth to return to positive
territory in Q2 13 but to remain below-trend until the end of 2014.
Economic data released at the end of November suggest that business sentiment is
bottoming in most euro area countries, while remaining well below the historical average.
Overall economic activity remains driven down by the ongoing fiscal tightening, credit
restraints in peripheral countries and private sector deleveraging. Despite the impressive
improvement in financial markets following the ECBs announcement of the outright
monetary transaction (OMT), surveys on bank lending show little transmission to the real
economy. Given the absence of a clear rebound in economic sentiment, our economists
have revised our 2013 growth forecast down slightly from +0.3% to +0.1% as they now
envisage GDP to start growing moderately only in Q2.
The 2014 outlook depends on EU governments making significant progress in the crisis
resolution framework. Even though the magnitude and simultaneity of the fiscal adjustment
have played significant roles in the economic slowdown, our economists believe the double-
dip recession could have been avoided if euro area governments had reacted more swiftly
and more efficiently to renewed tensions in sovereign debt markets. The decision to launch
an enhanced integration of the euro area at the June European Council is an important
Australian exports to grow
with port expansions
But demand will be the
constraining factor
European outlook
remains weak
and 2014 could also see
low growth

21 December 2012 23
milestone in the crisis resolution and should gradually restore sound financial conditions
across the board. However, discussions about the architecture of EMU are likely to be
chaotic, and tensions could resume temporarily in the meantime.
Assuming that significant progress is achieved in 2013 and the structural reform agenda gains
momentum, our economists expect growth to resume in 2014 and GDP to expand 1.4%.
However, this should not be sufficient to restart job creation, and unemployment would reach
a record high in peripheral countries, it would peak at double-digit record highs.
China: More stable growth
Chinas policymakers are expected to gather in December for the annual Central Economic
Work Conference (CEWC) to set the policy framework for 2013. Our economists expect the
government to retain its 7.5% GDP growth target and 4% CPI inflation target for next year.
Government policies for 2013 will likely favour activity related to the following three areas:
urbanisation, new strategic industries and consumption. The new party leadership,
introduced in November 2012 for the next ten years, has indicated that it is interested in a
more balanced, sustainable economy, rather than one marked by faster growth at the
expense of other social costs such as environmental degradation. In addition, we expect
consumption to account for an increasingly larger share of the growth, which is currently
predominated by fixed-asset investments and net exports. The new leadership has
suggested that it will try to encourage private consumption through a variety of measures
including more equitable income distribution and better social welfare. While this kind of
structural rebalancing will take time, it appears that the government plans to actively reduce
the overwhelming importance of fixed-asset investment. While downside risks could test
the will of the new leadership, so far the message has been consistent.
Overall, the central bank will likely maintain a relatively stable monetary condition. Our
economists no longer expect further interest rate cuts from the PBoC. But the CNY may
appreciate modestly, driven by both relatively high inflation and nominal appreciation
against the USD. It is critical to monitor changes tin the composition of total social financing
because some segments may contain potential financial risks.
FIGURE 18
EU real GDP (y/y change)

FIGURE 19
EU real industrial production (y/y change)
-8%
-6%
-4%
-2%
0%
2%
4%
6%
Q
1
-
0
0
Q
1
-
0
1
Q
1
-
0
2
Q
1
-
0
3
Q
1
-
0
4
Q
1
-
0
5
Q
1
-
0
6
Q
1
-
0
7
Q
1
-
0
8
Q
1
-
0
9
Q
1
-
1
0
Q
1
-
1
1
Q
1
-
1
2
y/y change in real GDP

-25%
-20%
-15%
-10%
-5%
0%
5%
10%
15%
J
u
n

0
8
S
e
p

0
8
D
e
c

0
8
M
a
r

0
9
J
u
n

0
9
S
e
p

0
9
D
e
c

0
9
M
a
r

1
0
J
u
n

1
0
S
e
p

1
0
D
e
c

1
0
M
a
r

1
1
J
u
n

1
1
S
e
p

1
1
D
e
c

1
1
M
a
r

1
2
J
u
n

1
2
S
e
p

1
2
Y/Y change in EU industrial production (%)
Source: Eurostat, Barclays Research Source: Eurostat, Barclays Research
Government policies moving
away from infrastructure
Some further CNY appreciation
may help keep imports
competitive

21 December 2012 24
India: A slower growth period
In terms of the fundamentals of the Indian economy, industrial production (IP) growth rose
to 3.3% from 0.5% in September, but was still below the +4% growth seen during FY 11-12
and 6% during H1 FY 11-12. Trends in consumption are also a source of concern as the
latest GDP data show that private consumption growth was at a multi-year low of 3.7% y/y
in Q3 12 (4.6% in Q1-Q3 2012), which compares with recent years that have seen more
than 7% y/y growth. However, there are a few positive signs emerging with a gradual
uptick in intermediate goods production, which typically leads overall IP by two to four
months. According to our economists, the gradual but steady uptick in this segment
provides evidence that economic activity is now on an upward trend. A combination of
more accommodative monetary stance and government policy initiatives is expected to aid
the recovery in growth in 2013. In line with these factors, our economists expect GDP
growth to reach 6.6% in FY 2013-14, from the 5.6% in FY 2012-13. These growth levels
represent a move toward a more stable level of economic activity rather than a sharp
turnaround in growth momentum.
Others
The economic outlook for the Pacific Basin remains better than in the Atlantic, with the
main economies posting healthy growth. While 2012 saw most regions recording slower
y/y growth rates, these are expected to improve with India and the remainder of emerging
Asia forecast to post growth back up at around 6.5% in 2013 and to 7.1% in 2014.
FIGURE 20
Economic assumptions Atlantic Basin (% y/y)
2010 2011 2012F 2013F 2014F
Global GDP 5.0 3.8 3.0 3.2 4.0
Atlantic Basin
Real GDP UK 1.4 0.9 -0.1 1.3 2.2
Real Industrial
production (IP)
UK 2.1 -0.7 -2.3 -0.2 2.0
Real GDP Eurozone 1.7 1.5 -0.4 0.1 1.4
Real IP Eurozone 7.4 3.5 -2.5 -2.8 0.0
Real GDP Latin America 6.2 4.4 2.9 3.3 3.9
Pacific Basin
GDP China 10.4 9.3 7.6 7.6 8.1
Industrial production China 15.6 13.7 9.8 11.0 12.0
GDP India 8.6 7.4 5.3 6.5 7.2
GDP Emerging Asia 9.3 7.6 6.1 6.5 7.1
Energy commodity pricing
Oil market outlook: Brent crude started the year trading around the 105 $/bbl, finished Q1
trading around the 122 $/bbl level, and by mid-December was trading around the 110
$/bbl mark. The two key drivers of this volatility have been: on the downside, the slow-
down in global macroeconomic activity and the periodic resurfacing of European sovereign
debt issues; while the upside has largely been driven by the periodic emergence of
geopolitical risks. In the background, the fundamentals have been mixed with lower oil-
demand growth reflecting the macroeconomic situation, but the supply side remaining tight
with gains in US production largely being offset by reductions in other non-OPEC regions.
As a result, the spare capacity available in the market remains at low levels, meaning the
market will remain sensitive to any supply side outages.
Indian growth will improve
Growth remains focused
on Asia
Oil could see a break out
in 2013

21 December 2012 25
This brings us to 2013 and while some developments, such as continued US liquids expansion
holds some downside, we believe geo-political risk will dominate this year and will hold the most
upside. In particular, the thorny question of the Iranian nuclear situation is poised to reach a
tipping point and, with resolution of the issue unlikely to be easy, we expect that this risk will
dominate from Q2 onwards and will strongly influence prices. Therefore, we are bullish on oil
and our Brent price forecast is for 2013 to average 125 $/bbl and for 2014 to average 130 $/bbl.
Gas market outlook: UK NBP gas prices have traded broadly in a range with quarterly average
prices coming in between 55-60 p/therm over the first three quarters of the year, while Q4 prices
have tended to be a bit stronger, trading between 65-70 p/therm. The relative stability in prices
hid significant shifts in the underlying fundamentals of the market. On the supply side, the UK
market saw a 51% y/y reduction in LNG takes, although this was partly offset by increases in
Norwegian flows (up 35% y/y). On the demand side, residential demand was up 6% y/y due to
a colder year than in 2011, but this was more than offset by a reduction in gas demand from the
power sector by 34% y/y. Despite these big shifts, the offsetting nature of these changes led to
limited volatility in prices.
The supply picture for 2013 remains largely the same, with little forecast further LNG losses but
the market does seem more poised with upside risks. The reason for this is there could be greater
demand, with the introduction of a UK specific carbon tax and the potential for around 6 GW of
coal plant being required to shut down by the end of that year. Given this, the market will need to
find some additional supply; if there is a cold winter that adds in further residential demand
prices would be poised for a move upwards. Much of the downside risk is to do with a ramping
up of Russian flows, and while Russia certainly has the productive capacity and transportation
infrastructure, it will need to lower prices if it is to stimulate much additional demand in markets
outside the UK. We forecast gas prices to see a gradual but sustained increase y/y, with NBP
prices averaging 65 p/therm next year (up 9% y/y) and 67.5 p/therm in 2014.
European carbon market outlook: Over 2012, European carbon markets saw a fair amount of
volatility, predominantly trading in the 6-9 /t range, with abundant supply weighing on the
market but punctuated by upside episodes with price rises driven by noise around the potential
for the EC to intervene in the market. By mid-December, the much delayed auctions of phase 3
carbon had begun and prices for the front-year contracts were being pushed to the bottom of
the range.
In terms of fundamentals, the market is already significantly long carbon and a recessionary
outlook for European industrial production in 2013 and the continued uptake of European
renewable forms of generation are squeezing thermal generation in power. Some additional
demand side is being seen by the power sector switching to coal from gas, but this is
unlikely to add much more than 30 mt to emissions. Therefore, the main prospect for price
recovery is the proposal by the EC to take 900 mt out of the caps of 2013-2015 and sell
them in 2019 and 2020. While the EC had promised to move quickly on this, the political
realities have led to more recent announcements that suggest that this proposal is likely to
go forward quite slowly. As a result, operationalisation of that back-ending is likely to be
delayed and 2013 could still see much of the 2013 cap being auctioned until the proposal is
formally adopted sometime in Q3 13. This holds out the possibility that prices will get worse
before they get better, as we expect prices to see some downside towards (and possibly
below) the 5 /t level. For 2013 we are forecasting prices to average 8.5 /t and to increase
to 10 /t as the back-loading is felt more significantly in that year.
With gas and carbon risks biased to the upside, which of these two commodities prevails
will begin to determine whether coal retains its competitive value.
2012 gas market was largely
one of trading in range
While 2013 is more of
the same
While things could get worse
and then better for carbon

21 December 2012 26
FIGURE 21
Barclays Energy market price forecasts
Market Product Units 2010A 2011A 2012 2013 2014 2015
Oil WTI US$/bbl 79.6 95 96 115 124 125
Brent US$/bbl 80.3 111 113 125 130 135
Natural Gas Henry Hub US$/mmbtu 4.39 4.02 2.77 3.25 - 4.00
NBP p/therm 42.2 56.4 59.5 65 67.5
Carbon EUA /t CO2 14.5 13.4 7.25 8.5 10 12
CER /t CO2 12.4 10.2 3.5 2.5 2 1.5
European demand
In terms of coal demand in Europe, the fuel continues to: benefit from relative prices in
power that has seen it gain market share from gas; while suffering from the overall
stagnation and recession seen in European economies and the continued increase in
renewable generation capacity.
In terms of EU power, total gross power output across the EU over the first seven months of the
year was flat y/y, with the increasing pressure of a slightly colder Q1 being offset by the
reductions seen in economic activity and cooler summer. While total generation was unchanged,
the call on conventional thermal generation was down 3% y/y (down 27 TWh) with the
additional generation largely coming from more renewables and better nuclear availability.
Despite the reduction in overall thermal power demand, coal-fired generation has remained
in the money in the power stack given the discussion of relative prices mentioned above.
In terms of European total coal demand:
European hard coal consumption was up by 6.4 mt (3.6% y/y) over the first seven
months while lignite consumption was up 7.6 mt (or 2.9% y/y) taking total steam coal
consumption up by 14 mt y/y. The figures hide a stronger first quarter and a weaker
summer period for hard coal consumption.
Hard coal consumption gains were focused in:
The UK, with consumption up 10.6 mt or a 30% increase y/y over the first nine
months of 2012. The UK gains have all largely come due to fuel switching, with coal
pushing gas out of merit;
Iberia, with consumption up 6.7 mt, or a 56% y/y increase, in the first seven months,
largely due to hydro levels being well below average levels. While hydro power
output was down some 10.7 TWh y/y by the end of November, coal-fired generation
in that period was up 9.5 TWh y/y. However, coal-fired generation had been up as
much as 10.8 TWh in July, suggesting that total incremental coal use from Iberia
across all of 2012 is unlikely to be much more than 6 mt;
Italy has seen a 0.8 mt or a 5% increase in coal use over the first eight months,
reflecting the lower ability to see fuel switching in that country.
Growth in lignite consumption has been more consistent throughout the year, coming
mostly from Germany (7.6 mt first nine months), spurred by the new large lignite plant
commissioned across 2011 and 2012. German hard coal use was down 1.1 mt over the
first nine months, meaning total coal use was up some 6.5 mt y/y.
Outside those markets, coal consumption gains were either less pronounced or fell, with
central European coal consumption down 8 mt across the first seven months.
European coal demand was
good in 2012

21 December 2012 27
European coal imports over the first seven months were up 9.3 mt, with gains in the UK (8.2
mt) and Iberia (5.1 mt) and most other regions seeing reductions in imports. With imports
exceeding consumption over that period, this points to inventory build going into the
summer and helps explain the lack of demand pressure at the end of the summer period.
For all of 2012, we forecast that total EU imports of coal will be up 15 mt a 3 mt reduction
on our previous forecast. Looking forward, we see more of the same although some inter-
country differences in outlook leads us to forecast that total coal imports could fall
modestly by 2 mt in each of the next two years.
Germany
While renewables continue to be important as a source of increasing power generation in a
market that is seeing little underlying growth, the notable development was the substitution
of lignite (up 7.6 mt, or 5.8% y/y over the first seven months) for hard coal (down 1.1 mt,
2.9% y/y). On a net basis, coal consumption was up by 6.5 mt although the call on imports
was only slightly down into the country (-0.5 mt).
Looking ahead, German coal burn is likely to remain at similar levels to what we have seen so
far with coal in merit against gas and lignite in merit against steam. In the next two years, a key
development to watch is the 7.5 GW of new coal-fired stations that are scheduled to come
online in 2013 and 2014 that will have much higher efficiencies than many of the existing
plant. The main addition in 2012 has been the 2.2 GW of lignite capacity added by RWE at
Neurath, which has already helped displace some hard coal as seen above. While gas plant
remains most at risk from seeing its load factors reduced further, older, less efficient coal
plant will also see its position in the merit order deteriorate. With renewable capacity also
being added and the next nuclear plant only coming offline in 2015, additional demand for
coal here in the absence of underlying power demand growth is likely to be limited, given
that gas remains marginal in the German power market.
For 2012, we are forecasting German coal burn to be up by 8.5 mt, although hard coal use
will be down by 1.5 mt, with most of the need for the added lignite being met by domestic
production. For 2013, we estimate that new plant will add some 4 mt to demand for hard
coal as 4.2 GW of new plants are expected to come on line, albeit most of them in H2, while
2014 will see 3.3 GW added and incremental coal use up by 5 mt.
FIGURE 22
European dark spreads favour coal on the merit order

FIGURE 23
European weather a mild winter, a brief cold spell and a
late start to the summer
-20
-10
0
10
20
30
40
Dec-11 Mar-12 Jun-12 Sep-12 Dec-12
54% v 30% 48% v 36%
Gas SRMC - coal SRMC /MWh

-50%
-40%
-30%
-20%
-10%
0%
10%
20%
30%
40%
50%
S
e
p
O
c
t
N
o
v
D
e
c
J
a
n
F
e
b
M
a
r
A
p
r
M
a
y
S
e
p
O
c
t
N
o
v
D
e
c
J
a
n
F
e
b
M
a
r
A
p
r
M
a
y
S
e
p
O
c
t
N
o
v
D
e
c
J
a
n
F
e
b
M
a
r
A
p
r
M
a
y
S
e
p
O
c
t
N
o
v
D
e
c
J
a
n
F
e
b
M
a
r
A
p
r
M
a
y
S
e
p
O
c
t
2008 2009 2010 2011 2012
Source: Barclays Research Source: FGE, Barclays Research
Coal imports to fall in
Germany this year
Key developments is new plant

21 December 2012 28
FIGURE 24
EU renewable capacity additions (GW)

FIGURE 25
German thermal capacity additions (GW)
0
5
10
15
20
25
30
35
2000 2002 2004 2006 2008 2010 2012 2014
Wind Solar Other renewables

-3000
-2000
-1000
0
1000
2000
3000
4000
5000
2011 2012 2013 2014
Additions (MW) Closures (MW)
Source: EWEA, EPIA, Barclays Research Source: BNA, Platts, Barclays Research
UK
One of the most active of the fuel switching markets is the UK, and coal consumption in the
first 9 months of 2012 was up 10.5 mt (29% y/y). Domestic coal production over the same
period saw a decline of 1.4 mt (down 10% y/y), leading to a greater call on imports and on
inventories. Over the first nine months, total imports have been up by 10.3 mt while
inventories have averaged 1.9 mt less y/y, finishing September at 15.8 mt which is 2.5 mt
less than the same period last year.
With all of the dynamics driving higher coal use seen to September persisting into Q4 12,
the broad trend will persist of coal use and imports up. With the cold Q4 seen to date, this is
likely to lead to further increments, even if these are likely to slow down as Q4 11 had
already started to see coal fully in the money against gas. Given this, we expect coal use in
the UK will be some 13 mt higher y/y (25% up y/y) in 2012.
Healthy coal burn in the UK
continues
FIGURE 26
UK power generation market share (%)

FIGURE 27
Healthy coal consumption in the UK (mt)
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Jan-10 Jul-10 Jan-11 Jul-11 Jan-12 Jul-12
Nat gas Coal Nuclear Renewables

0
1
2
3
4
5
6
7
8
2009 2010 2011 2012
Source: DECC, Barclays Research Source: DECC, Barclays Research

21 December 2012 29
As we outlined in the last issue, we believe 2012 is shaping up to be a peak year for coal
consumption in the UK as in 2013:
The derogations taken by a number of coal plant under the large combustion plant
directive (LCPD) will result in up to 6.3 GW of installed coal capacity coming off the grid
as they use up their limited life-time hours. Of this, around half could be off-the grid by
the end of Q1 13, while the remainder would likely see hours used up in Q4 12. In terms
of annualised generation, this could remove as much as 26 TWh of coal fired
generation, or 10.6 mt coal demand. We estimate the impact on coal consumption in
2013 will be half of that, or a 5 mt reduction, before the full impact is felt in 2014.
The competitive position of coal will see some erosion as the UK implements a carbon
floor tax that will add to the costs of generating with fossil fuels. The carbon tax rates
are 4.94 /t CO2 (April 2013-March 2014), before climbing to 9.55 /t CO2 (April
2014-15). With coal more carbon intensive than gas, the tax will fall harder on coal-fired
generation. While current forward prices suggest that coal will largely retain its market
share in 2013 despite the tax imposition, the tax means that the fuel is much more
exposed to any changes in the relative fuel prices, with potential strengthening in EU
ETS CO2 prices from potential policy intervention (see Quarterly Carbon Standard, 11
October 2012) a particular risk. By 2014, we do expect that gas could well be more
competitive given the +10 /t adder to the carbon price, particularly if adding to carbon
prices that have risen on intervention.
Given both of these, we are forecasting that UK coal consumption will be down 5 mt in
2013 and a further 7 mt in 2014.
FIGURE 28
Effect of UK carbon tax on competitiveness of generation costs
20
25
30
35
40
45
50
55
SUM 2012 WIN 2012 SUM 2013 WIN 2013 SUM 2014 WIN 2014 SUM 2015 WIN 2015
Gas - NBP /MWh Gas - NBP: w/o CO2 tax /MWh
Coal /MWh Coal: w/o CO2 tax /MWh

Note: Uses 3 December prevailing forward curves for all commodities. Source: Ecowin, Barclays Research
Iberia
Spanish coal use has been strong this year, as the common themes of increased
competitiveness of coal, but pressure from renewables has played out. While Spanish total
power generation to the end of November was down 1.1% y/y, its generation profile has
seen: hydro generation down some 10.7 TWh (-39% y/y); gas generation down by 11.8
TWh (-26%); while coal generation was up 9.5 TWh (27%); renewables up 6.8 TWh (14%)
and nuclear generation up 2.6 TWh (6%). A key interplay here has been between gas and
coal, with much of the increase in coal-generation driven by fuel switching, while much of
the drop in hydro was made up by the increases in renewables and nuclear.
Power demand down but coal
taking market share

21 December 2012 30
The big question for Spanish coal use is how much hydro comes back and does this push
some coal plant out of base-load and back into mid-merit. By November, hydro reservoir
levels still remained 20% below average five-year levels, suggesting for the remainder of the
year, and for Q1 13, hydro output is likely to remain at currently modest levels. The key for
Spanish Hydro will be the winter rainfall and this creates some downside for Spanish coal
burn in power over the coming two years. A return of maybe 5 TWh of hydro next year
would lead to some modest reductions in coal use in this country.
As outlined above, we forecast Spanish coal imports in 2012 will be around 6 mt y/y, as the
increases in incremental coal generation have slowed in the summer and there will be some
base effects given fuel switching already began in earnest in Q4 11.
In 2013, although carbon price support may help to erode some of coals share in the mix, it will
be less important than in the UK and, given our expectations of price relativities in 2013, coal
burn should stay largely unchanged, subject to weather variations. In particular, a better year for
hydro coupled with some minor growth in renewables could see the total demand for thermal
generation shrink, and while this will fall more heavily on gas, coal demand on the margin could
be eroded. We are forecasting coal imports in 2013 will fall by 1 mt while in 2014, with a more
normal return to hydro generation levels, will see imports post another 3 mt fall.
FIGURE 29
Spanish hydro reservoirs (GW)

FIGURE 30
Spanish hydro output (GWh/w)
7,200
8,200
9,200
10,200
11,200
12,200
13,200
14,200
15,200
16,200
17,200
Jan Mar May Jul Sep Nov
2011 2012 Average

200
400
600
800
1,000
1,200
1,400
Jan Mar May Jul Sep Nov
2011 2012 Average
Source: Bloomberg, Spanish Ministry of Agriculture, Barclays Research Source: Bloomberg, Spanish Ministry of Environment, Barclays Research
China: Demand stablising
Hit by slower economic growth and a surge in hydro power, Chinas total coal demand
tumbled in 2012, contracting for the first time in years, albeit only by 0.3% y/y.. Domestic
spot prices dropped as import coal filled coal yards, and inventories were higher than
normal going into the winter heating season. Looking forward, we are forecasting that:
In 2013, Chinese demand for thermal coal will normalise, growing at an estimated 42
mt. While domestic coal production can match the increase in incremental demand,
constrained rail capacity will remain, and imports at roughly 2012 levels will needed to
balance the market.
This relative balance may tip into surplus in 2014, especially toward the end of the year,
as new rail capacity and increased port throughput let domestic coal take a bigger share
of the thermal coal market and reduced the reliance on imported coal. Demand is
expected to grow an estimated 46mt y/y as China continues to grow at a more
moderate level.
Slightly less of the same for
2013 and 2014
Chinese coal demand down y/y

21 December 2012 31
Demand: Entering a period of slower growth
Chinas coal demand is likely entering a period of slower growth, recovering moderately
from the trough of 2012 that saw coal demand contract by 32 mt for the first time in years.
Chinas thermal coal demand is driven mostly by power generation, around 80% of which is
consumed by industrial activities. Therefore, Chinas economic growth prospects in the next
two years will largely determine the trajectory of Chinese demand. Our economists forecast
that the Chinese economy has entered a lengthy period of growth rate stabilisation, rather
than acceleration. Our economists expect GDP growth to rise modestly from the 7.6% in
each of 2012 and 2013 and 8.1% in 2014.
Power-sector demand: Rise more slowly
Given these considerations, we forecast total power generation in the coastal provinces
relevant to seaborne coal demand to grow 6% in 2013 and 8% in 2014, up from no growth
in the January-October period of 2012. While this remains healthy, it is lower than the 12-
15% growth rates achieved in 2010 and 2011.
Within the total level of generation, we expect the share of coal-fired power plants to shrink
slightly as a result of the nuclear build-out along the coast. In 2007, China embarked on an
aggressive expansion plan for nuclear power to increase its capacity from the then 8.8GW
to 40GW by 2020. While project approvals were put on hold for more than a year following
the March 2011 north Japan earthquake and the resultant nuclear reactor accident, projects
already under construction were not much affected. The first group approved at the
beginning of the push will come online in the next five years.
We estimate that more than 3GW of nuclear capacity will begin operation in 2013, and 6GW
will come online in 2014. As all these reactors are on the coast, they will affect the
generation mix of the biggest consumers of seaborne coal more than the rest of the
country. We project that nuclear power generated will account for 8% of the total in 2013
and 10% in 2014, up from a steady 6% in the 2008-11 period.
While the nuclear build-out will be a steady and gradual process that will help erode coals market
share, hydro power remains a big swing factor, accounting for anywhere between 8- 14% of
actual coastal generation, depending on weather patterns. To understand the importance of
hydro to coal demand, incremental coal demand averaged 63 mt y/y in 2009-2010 but surged to
92mt in 2011, due to an exceptionally dry year. The very wet 2012, along with the slowdown in
economic growth, has meant coal demand has reduced by an estimated 32 mt.
Chinese coal demand driven
by power
which we expect to grow in
the coming two years
As will nuclear generation
which is all focused on
coastal demand
FIGURE 31
IP is correlated with power generation

FIGURE 32
Hydro power surged in 2012
-5%
0%
5%
10%
15%
20%
25%
30%
5%
10%
15%
20%
25%
Jan-10 Jan-11 Jan-12
IP vs. powergen % y/y
IP Powergen

0%
5%
10%
15%
20%
25%
12 1 2 3 4 5 6 7 8 9 10 11 12
months
Share of hydro generation in total
5yr range 2011 2012
Source: CEIC, Barclays Research Source: EIC, Barclays Research
Hydro will be a swing factor

21 December 2012 32
We expect that hydro power generation will normalise back to five-year average levels over
the next two years, which represents an 8% y/y reduction from 2012s historically high
levels. Unexpected changes to this forecast will obviously have an impact on coal-fired
power generation.
New hydro power capacity is not likely to be a major factor for the coastal area despite the
fact that the government prioritises hydro projects due to heightened concerns about the
environment. While nationally there will be additions of hydro power, the impact of this shift
is likely to be less pronounced for the coast because most of the new mega projects are in
the southwest of the country. While Guangdong may get more power transmitted from new
hydro power plants in the southwest, for the next two years it is likely to be weather
patterns that determine the weight of hydro power.
As a result, we are forecasting thermal-power generation to rise an estimated 6.2% in 2013
and 6.1% in 2014, up from the -3% in January-October 2012 but down from the average of
14% in 2009-2011. With a continued gain in coal efficiency, this translates into 5% growth
in coal demand for both years. Some upside to the numbers would come from either:
Faster power generation growth, from either faster growth in the building sector or
because the government resorts to renewed infrastructure spending to stimulate the
economy; or
Dryer-than-usual weather that erodes hydro generation and creates more demand for
coal usage.
Other demand: Cement industry
The cement industry is an important downstream user for coal and the coastal provinces
produce around a quarter of the total national cement output. Growth has slowed gradually
in 2012, to an estimated 5% y/y rate. In line with the macro-picture, we expect cement
production to pick up gradually to 6% in 2013 and 8% in 2014. As the industry efficiency
standards improve, we are forecasting that demand for coal from this sector will rise 3% in
2013 and 5% in 2014.
The power and cement industries account for an estimated 70% of total Chinese coastal
coal demand. While total demand is increasing, we do we expect a gradual destocking at
ports and east-China power plants in the next two years. After accounting for this, we see
demand rising an estimated 42mt in 2013 and 46mt in 2014.
Import requirements: Domestic bottlenecks
In 2013, steady imports at least at 2012 levels are needed to balance the market and meet
the forecasted moderate demand increase, as rail bottlenecks remain a constraint for
domestic coal. Until the completion of coal-only lines that transport coal from western Inner
Mongolia to the ports in late 2014, capacity of the main coal links that connect northwest
China to the coastal consumers will only grow gradually.
And should come down from
high levels
Chinese thermal generation
should be up in 2013
As should be cement
production
Rail bottlenecks remains

21 December 2012 33
FIGURE 33
Arb was positive for most of the year

FIGURE 34
Imports are now a sizeable portion of China thermal supply
-100
-50
0
50
100
150
200
Jan-12 Mar-12 May-12 Jul-12 Sep-12 Nov-12
CNY/t
Arb for imported coal
Arb over Aus coal Arb over Indo coal

Domestic
supply
80%
Net import
20%
2012 seaborne supply to coast
Source: CEIC, Sxcoal, Barclays Research Source: CEIC, Sxcoal, Barclays Research
Domestic coal production is not a problem, as mine consolidation has helped bolster
productive capacity in both:
Shanxi, where consolidation initially suppressed its production in 2009 to 590 mt, but
has since seen output grow steadily to an estimated 900 mt in 2012; and
Inner Mongolia, which made up for the shortfall in Shanxi production in 2009 and 2010,
and could ship out high-quality steam coal from western parts of the province on rail
links usually dominated by Shanxi coal. This province has now overtaken Shanxi as the
biggest producer of coal with output exceeding 1 billion tonnes in 2012.
Inner Mongolia does face domestic transport issues with good quality steam coal from the
west Ordos region struggling to find space on the already cramped railways such as Daqin
and Shenshuo. Some of these issues are beginning to be resolved with Chinas main seven
ports in the north that ship out domestic coal to the south having invested heavily in
expansions, and the next two years will see a sizeable increase in capacity as:
Caofeidian, part of the Tangshan port, is expanding in seven phases, each phase adding
50 mt/y of throughput capacity. The first phase of the project was completed earlier this
year, and the next phase will come online in early 2013.
Shenhua is expanding its own Huanghua port by 50 mt/y in 2013, and increasing the
size of its berth at the Tianjin port by 35 mt/y in 2014.
Ports in Liaoning, not a traditional coal port, have increased capacity in anticipation of
coal links that connect them directly to eastern Inner Mongolia. Incremental capacity at
these ports, estimated at 100 mt/y in 2013 and at least 85 mt/y in 2014, will on paper
more than meet the increase in incremental demand.
Existing ports such as Qinhuangdao have proven themselves as able to exceed designed
capacity, with Qinhuangdao shipping out 250 mt/y in 2011 well above its 190 mt/y
design capacity.
While the port capacity is expanding, much of the new capacity will remain idle until late
2014 or 2015, as they are still linked to cramped railways that have struggled to increase
capacity. Rail capacity additions include:
The Daqin railway, a key link for coal produced in northern Shanxi and western Inner
Mongolia, has raised capacity from the original 200 mt/y in 2005 to 450 mt/y in 2012

21 December 2012 34
through a series of upgrades and efficiency gains. Further capacity increase will likely be
more modest, adding around 10 to 20 mt/y.
Upgrades of the Shenshuo railway, owned by Shenhua. This includes two spur lines that
will transport coal from its new mines and that are expected to come online in late 2013,
although this will need to rely on the capacity of the cramped existing trunkline until the
full upgrades to the Shenshuo trunkline are finished. The expansion of Shenshuo
trunkline is planned to increase rail capacity by more than 200 mt/y and is expected to
be complete late in 2014.
The Zhangtang rail that connects west Inner Mongolia to Tangshan ports with an initial
capacity of 120 mt/y is expected in late-2014,
As a result, rail capacity for the main northwest producing region will be constrained
somewhere between 30 to 60 mt/y by 2013 despite the large increase in port capacity.
However, there will be a better match between port and rail capacity by 2014, though ports
may not be able to fully accommodate a 200 mt/y increase in supply. It is possible that rails
for the lignite from eastern Mongolia will have gained traction by then, but producers will
likely need to offer a big enough discount to let that marginal tonnage flow to coastal China.
In summary, domestic transportation constraints will still prevail in 2013, although we
believe that thermal imports will need to stay around the 2012 levels of roughly 140 mt/y to
balance the market. Improvements in domestic constraints but looser domestic conditions
in 2014, especially toward the end of the year, may cause imports to pull back toward the
110 mt/a level. As imports are primarily price driven, the Chinese spot price will be
increasingly correlated with the global seaborne price, though domestic prices have been
sticky due to issues around the functioning of the market.
India: Growth engine
Over the first seven months of the financial year 2012 (April to October), India has imported
72.3 mt of thermal and coking coal with around 70% of these likely to be thermal coal. Coal
imports by Indian power stations during the first seven months of the financial year 2012-
13 (April to October) were put at 31.1 mt.
In terms of the calendar year, thermal coal imports over the first six months were up 7.5 mt
y/y (a 16% increase) and puts India on target to increase coal imports over the year to 110
mt, a 23 mt/y increment.
FIGURE 35
Indias annual incremental coal consumption

FIGURE 36
Growth in Indian imports
0
10
20
30
40
50
60
70
80
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Coal consumption (Mt)
Domestic supply additions (Mt)

0
20
40
60
80
100
120
140
160
180
200
2007 2009 2011 2013 2015 2017
Coal import numbers
Source: BP, Government of India, Barclays Research Source: Ecowin, Barclays Research
Although these are being
invested away
Indian coal imports on the
increase

21 December 2012 35
The strong growth in imports has occurred against the background of the reductions seen
in global coal prices, such as the 17% fall in RB FOB prices. However, some of the benefit of
reductions, has been offset by a 12% depreciation seen in the rupee this year. The
continuing high rupee cost of coal has continued to push Indian buyers to purchase lower
priced, lower CV, sub-bituminous coals.
While pricing may not have been that favourable to imports, Indian volumes are increasing as:
Strong structural growth in the power sector from increased electrification as well as
new generation capacity being added (see discussion under power capacity additions);
Declining availability of domestic coal (see discussion under domestic coal supplies); and
The government has mandated coal imports and increased pressure to meet generation
targets to combat issues of power rationing and unplanned blackouts due to growing
power demand.
Power capacity additions
The latest data available from the CEA (Central Electricity Authority) for the month of
October 2012 show a total of 1.4 GW of new additions to power generation in India, up on
0.87 GW added in September. Across the financial year-to-date (April to October), Indian
power generation capacity additions are close to 9 GW, taking total installed power
generation capacity in the country to 209 GW.
According to the Minister of State for Power:
A total of 17.9 GW of additional power generation capacity is expected to be added
during the current financial year (April 2012 March 2013). Of this planned capacity,
85% or 15 GW is expected to be in the thermal sector.
159 power plants with generation capacity of 114 GW are under construction. 108
(68%) of these with a capacity of 100 GW are thermal. Of the thermal power plants, 63
GW is being developed by private sector companies, while 18 GW is being developed by
state power generation companies. 19 GW is expected to be developed by central power
generation companies like NTPC and DVC.
We expect these power capacity additions will help support a healthy appetite for Indian
coal imports, and this structural growth element is likely to trump any cyclical slowdown in
industrial power usage.

FIGURE 3
India power capacity additions (GW)

0
1
2
3
4
5
6
Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar
2012-13 2011-12
Source: Central Electricity Authority, Barclays Research
Although much of it is sub-bit
as Rupee has fallen
Power capacity additions to
remain healthy

21 December 2012 36
Domestic coal supplies
Domestic coal production during the first seven months of the year (April to October) of 2012-
2013, has stood at 282 mt (up 8.6%), compared with 259 mt reported in the same period last
year. However, these output numbers were 6% (18 mt) lower than the target of 300 mt for the
period. The domestic coal mining sector continues to face several challenges including:
90% of Indias domestic coal production is dependent on open-cast operations,
exposing it to weather driven variability.
The quality of the coal produced is low, with high ash content, and prices are lower than
international benchmarks. Given that most mines are located away from the key
demand centres, domestic transportation constraints remain important.
Mining productivity is low at around a third of South African levels and a tenth of US
mines, while also seeing a number of recent labour disputes.
Structural problems exist in expanding production, encompassing issues in land
acquisition, forest clearing as well as a lack of mechanised equipment.
It is the disjoint between the expansion of power generation capacity and the ability to expand
domestic coal production that will continue to drive a need for imported coal in India.
Summary
Given the above points, we are constructive on Indian coal imports for next year. We expect
coal imports to be 133 mt in 2013 and 162 mt in 2014, representing a growth of 19% and
22%, respectively. While the bulk of these growth numbers are from the potential
associated with power generation capacity growth, cyclical elements from industrial usage
are warranting a close watch.
While coal burn will be supported, the general lags in domestic coal production will keep the
call on imports strong. The value of the Indian rupee will be a key trigger for Indian coal
buyers, and given our FX analysts forecast of the 2013 exchange rate at 53.5 USD/INR
(close to current spot levels), there is likely to be less purchasing power lost due to currency
depreciation. Having said that, the Indian buyers should remain amongst the most price
sensitive and we expect that the appetite for sub-bituminous volumes for the country will
remain high and will help support increases in Indonesian exports. In this respect, any
movements in Indonesia, or South Africa, to limit the exports of sub-bit coals will be felt
most keenly in this country.
Japans recovery: Coal before gas
Japanese thermal coal imports continue to increase post-Fukushima with imports over the
first ten months of the year up by 9.9 mt or 9.9% y/y suggesting incremental coal take will
be up by around 12 mt this year.
Coal demand in Japan will be sensitive to what happens to its nuclear reactors. As expected,
there has been no increase in the number of nuclear reactors that are online since the two
nuclear reactors at the Oi plant in Fukui Prefecture were brought back to operation in July
2012. Opposition to nuclear restarts remains tangible and has become an election issue,
meaning there remains considerable political difficulty in progressing with other start-ups.
We do not think that any new plants will come online until after Q1 13. Having said that,
even if more nuclear plant does come online in the second half of the year, we would expect
that the additional generation will be more about meeting unfulfilled power demand. We
While domestic coal
production is lagging demand
Indian coal imports look like
they will continue increasing
Japanese coal import
demand surging on lack of
operational nuclear
Little additional upside now
to come

21 December 2012 37
would also expect, given relative fuel prices, gas plant would be more at risk of losing
market share as it is more expensive, although a considerable volume of plant would need
to come online before that becomes an issue.
The outlook for further upside to coal imports in 2013 is likely just to come from a restart of
the 2,000 GW of coal capacity in the Tohoku region, namely Tohoku Electrics Haramachi 1
and 2, which are not scheduled to come back until the middle of 2013 and could increase
2013 total coal burn by 1 mt and a further 3 mt in 2014.
We have slightly increased our 2012 forecast for Japanese thermal coal imports to ramp up
by 12 mt, up from our previous forecast of 7 mt, Given the faster ramp-up of coal use, we
are forecasting: another 1 mt to be used in 2013, which keeps the forecast total at 133 mt;
while another 3 mt will be used in 2014.

FIGURE 37
Monthly coal imports by Japan (mt)
7
8
9
10
11
12
13
2009 2010 2011 2012
Others
Korea
Korean coal demand could have some upside as issues arose in November with a number of
nuclear power plants. Two power plants were initially closed due to irregularities around
safety permits for a number of parts, while a further four plants that were off on
maintenance now may not come back online when expected due to hair-line cracks being
found in the reactors. The closures raise the potential for 6 GW of plant to be off during Q1
13, and this has raised questions over providing sufficient power for the country. The
Korean ministry outlined that while it expected some 1.3 GW of additional peak power could
come from private generators, it also mentioned that rolling blackouts and other demand
side measures might be necessary.
However, if all 6 GW of nuclear is off for the H1, we calculate that this would remove some 4
TWh a month of nuclear generation and all of this could be made up by the 25 GW of gas-
fired plant which sits mid-merit plant with an average load factor in 2011 of around 45%. If
Korea turns to the market as Japan did post-Fukushima, we would expect higher gas
demand of around 0.75 bcm/m and across Q1 13 this could add 2.3 bcm of additional LNG
requirements, and for a full year it would add around 7 bcm/y to imports. However, while it
does seem that a loss of 6 GW of nuclear could be met largely through recourse to the LNG
market, this is a more expensive option than coal and we expect that some marginal
demand for coal volumes will arise if the outage of these nuclear plants is prolonged.
Limited to another 4 mt in the
next two years
Issues now affecting Korean
nuclear plants
LNG has the most spare
capacity

21 December 2012 38
While there is the possibility that the situation will normalise relatively soon, there is some
evidence that the countrys coal-fired electricity generation capacity is now being stretched
as the government is mandating plants to increase their stocks of high CV coal, keeping an
average of three weeks of forward cover. Therefore, we think Korean coal demand could
rise by 2 mt in 2013.
Inventories
Europe
The evolution of European coal inventories this year can be broadly divided into two halves.
In H1, coal inventories at the EMO and OBA terminals were close to the four-year average,
although there was a surplus when compared with 2011s levels. Going into the second half,
however, inventories failed to build in line with seasonal patterns. As a result, European coal
inventories are now close to 1.2 mt below 2011s level as well as 1 mt below the seasonal
average. Inventories through the fourth quarter have remained steady, as the rate of
incoming volumes closely matched the drawdown requirements by utilities. Going into the
first half of next year, we would expect some needed restocking to occur to bring these
inventories back to the seasonal average.
By the end of September, UK inventories remained at historically low levels for the time of
year, a pattern that has established itself over the past two years. This does suggest that
coal market participants are generally running with lower inventory levels, freeing up
working capital which is likely to be important in an environment where margins on most
activities remain low.
FIGURE 38
Stocks at Amsterdam and Rotterdam ports (mt)

FIGURE 39
UK coal inventories (mt)
3.0
3.5
4.0
4.5
5.0
5.5
6.0
2012
2011
4 year average

0
5
10
15
20
25
30
2009 2010 2011 2012
Note: Includes stocks at OBA terminal (Amsterdam) and EMO terminal
(Rotterdam). Source: Barclays Research
Source: DECC, Barclays Research
China
Harsh wintry conditions in many parts of China and a recovery of thermal power generation
helped trim stocks at ports and power plants in early December, with Qinhuangdao port holding
a seasonally average 6.6mt of coal and power plants carrying 22 days of cover, down from a
peak of 31 days in October. As hydro power normalised from very high levels earlier in the year,
higher coal burn has tightened the market to some extent. On the supply side, coal output from
the second-largest producer, Shanxi, reportedly fell 2.5% y/y in November, showing some
supply discipline, and rail shipment on the key rail links also dropped y/y in the month. While the
surplus has shrunk, the market remains comfortably supplied, evidenced by continued softening
But coal plants should be
pushed harder
Coal inventories in Europe
are low
But above average in China

21 December 2012 39
of spot prices into the high season. Stocks at large coal mines are yet to be worked down,
remaining at 40mt or 43% higher y/y by the end of November, and imports were likely boosted
in November by an open import arb in October.
India
According to data from the Central Electricity Authority (CEA) on coal inventory at Indian
power plants as of mid-December:
Combined power plant coal stocks of domestic coal in India totalled 10 mt, up 20% y/y
and 38% m/m. These reserves are enough for only seven days of coal burn, compared
with the CEAs recommendation of at least 22 days.
The number of power plants with stocks deemed as super critical eased last month,
from 51 power plants to 36. Of these, 26 had inventories lasting less than four days of
consumption, down from 35 a month earlier, the CEA data showed.
The reasons for critical stock levels at these utilities range from lack of imported coal,
inadequate domestic coal availability, as well as higher than anticipated power generation.
These critical inventory levels risk an increasing incidence of power rationing as well as
blackouts, and we expect the reactive role from policy makers to gain further momentum
next year, not only in setting import targets but in also appraising whether these targets are
being fulfilled. We expect such a resolution to yield further support for steam coal imports.
Pithead coal stocks have declined for the seventh month in a row on the back of better
availability of coal moving equipment. From stock levels of almost 70 mt available in April,
the inventory has declined at an average rate of 3.6 mt/m to reach 47 mt by the end of
October, similar to last years levels. The draw-down of inventories at domestic coal mines
does point to both increasing demand and potentially issues around domestic productivity.
FIGURE 40
Qinhuangdao stocks stayed in range

FIGURE 41
Power plant coal stocks lower, but still above average
3
4
5
6
7
8
9
10
52 6 12 18 24 30 36 42 48
Mt
Weeks
QHD inventory
5yr range 2011 2012

5
10
15
20
25
30
52 6 12 18 24 30 36 42 48
Days of use
Weeks
Major power plant coal stocks
4yr range 2011 2012
Source: CCTD, Barclays Research Source: CCTD, Barclays Research
And below average in India

21 December 2012 40
Freight outlook: Little chance of recovery
The state of the dry freight industry remains moribund, with freight rates lingering at levels
of below 1000 on the Baltic Dry Index (BDI) for most of the year. The slowdown in global
economic growth has moderated the growth in the volumes of traded bulk commodities
and has affected the growth in demand for charters. The beginning of 2012 saw the
continuation of decreasing freight rates in a trend that started in early Q4 11 and, despite
some improvement through November, the index finds itself back under the 1000 level. The
index is currently trading in the mid-700s, approaching the 650 low seen in February, a
value that the BDI has not touched since 1986.
FIGURE 42
Dry bulk rates: BDI; Capesize (BCI); Panamax (BPI)

FIGURE 43
Capesize : Panamax ratio
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
Dec 11 Feb 12 Apr 12 Jun 12 Aug 12 Oct 12 Dec 12
BDI BCI BPI

0.50
1.00
1.50
2.00
2.50
3.00
3.50
4.00
Jan Mar May Jun Aug Oct Dec
2010
2011
2012
Source: Reuters, Barclays Research Source: Reuters, Barclays Research
Supply
In terms of supply, over the first 11 months of 2012: the Capesize fleet expanded by 12% to
279 mn. dwt; and the Panamax fleet expanded by 14% to 174.5 mn. dwt. Given the average
growth over 2012, the total combined fleet for all dry bulk vessel types will stand around
734.5mn dwt at the end of 2012, a 20% increase from last year, with Panamax and
Capesize carriers making up two thirds of the total.
Despite this substantial growth:
The realised growth rates are below order-book forecasts at the end of last year. We
expected an extra 60mn dwt (24% y/y growth) worth of Capesize vessels would enter
the market in 2012. Given the difficult operating environment and diminishing vessel
utilisation, only 41mn dwt have so far been realised. While the delays may simply reflect
slippage into 2013, rather than cancellations, the pressure on freight rates would have
been much worse had order books been fulfilled. Looking forward, the order book also
looks smaller than at the end of last year, as the number of vessels due for delivery in
the coming four-year period has changed from 2379 in 2011 to 1361 today a 42%
decrease and the lowest number since the end of 2006.
Scrappage rates are up with 31mn dwt having been scrapped for the year to November,
32% more than scrapped across all of 2011 a year which saw deletions up around
300% from the previous year.
Freight rates had another low
year in 2012
Fleet additions have continued

21 December 2012 41
As a result, net additions to the dry bulk fleet are likely to be, in number of vessels, around
the 650 mark in 2012, less than the 757 added in 2011 and 818 in 2010. The ratio of
deletions to additions for the past couple of years has also grown from 8% in 2010 to 33%
so far this year.
The scrappage numbers do come against a background of the low prevailing scrap rates
paid by ship breaking yards. By the end of June, these stood at the 425 $/t mark, 10% less
than the same time last year. Since then, prices have drifted down further to under 390 $/t
reflecting the high level of scrappage seen over the year. Despite the low rates, scrappage is
continuing as the cost structure of many chartering firms can mean that the overheads of
keeping a ship on the water can be prohibitive if utilisation is too low.
Looking ahead, the cash incentive to scrap is now reasonably low, and owners may be
reluctant to further break ships as now the majority of the Capesize and Panamax fleets on
the water are relatively young. In addition, a number of other factors may still encourage
buyers to take new deliveries:
Newbuild prices remain attractive across the different dry bulk vessel specifications.
Current prices for Capesize stand at around $45mn; the low end of the 2012 price range
and 15% lower than the average of 2011. The comparison becomes even starker when
looking at 2008 prices which were 91% higher ($96-76mn range). The situation is
similar for Panamax size as newbuilds are priced at $27.5mn, which is almost a quarter
less than the highs of 2011, and 43% less when compared with the prevailing prices in
2008 ($54 mn - $42 mn range);
Many new vessels benefit from improved efficiencies derived from better hull and
engine designs, which allow a reduction of variable operating costs; and
Contracts to purchase from shipyards are typically settled in two instances; upon the
completion of the hull and upon completion of the entire vessel. Some buyers will
default on the second payment, leading builders to deeply discount the final selling price
in order to capture at least some of the build cost and hopefully break even.
FIGURE 44
Net change in bulk fleet (vessel number)

FIGURE 45
BDI (LHS) vs. fleet size (mn dwt) (RHS)
-60
-35
-10
15
40
65
90
115
140
165
Nov-09 May-10 Nov-10 May-11 Nov-11 May-12 Nov-12
Deletions
Additions
Net Change

400
450
500
550
600
650
700
750
500
1,000
1,500
2,000
2,500
3,000
2009 2010 2011 2012
Total fleet size
BDI
Source: SSY, Barclays Research Source: Reuters, SSY, Barclays Research
While heavy scrappage has
reduced rates
Net additions likely to continue

21 December 2012 42
FIGURE 46
Main dry bulk vessel statistics (vessel numbers)
Vessels 2010 2011 2012F
Panamax 185 286 382
Capesize 214 249 227
Total additions 399 535 609
Scrappage 27 150 203
Net additions 372 385 406
Source: SSY, Barclays Research
Given all of this, for 2013 we think that total additions to the fleet will be 50mn dwt,
scrapage of 17.5mn dwt and net additions at 32.5mn dwt.
Demand
The demand side of the market is uncertain with much of it reliant on economic growth out
of Asia. Of particular importance will be China and its demand for iron ore to go into steel
production.
Steel production
According to preliminary figures disclosed by the Chinese Iron and Steel Association (CISA),
crude steel production slightly increased through the tail end of November. The new
estimates released by the association disclosed that the national daily crude steel output
reached 1.95 mt in late November (715 mt annualised). The countrys crude steel
production, which makes heavy use of iron ore pellets, will by the end of 2012, have grown
by 3.8% y/y, compared with an average annual growth rate of 17.3% over the previous ten
years, to around the 710 mt mark.
While demand may face undercurrents from domestic economic growth stabilising, steel
exports continue to give an extra layer of support. Chinese steel exports in November came
in at 5.13 mt (up 22% y/y). Overall, total net exports are now annualizing at 49 mt, higher
y/y when compared with the 33 mt in 2011. For 2013, we expect demand from
transporting steel to provide similar volumes of cargo to the dry bulk fleet as seen this year.
Iron ore
Given Chinese iron ore imports have a high correlation with crude steel production, the
latest iron ore import numbers published by the Chinese General Administration of Customs
show that over the first 11 months of 2012, China imported 675 mt of iron ore, representing
a y/y growth of 8%. By the end of the year, we expect that China will have imported 735.8
mt of iron ore, up 7% y/y. Although this is an increase, it is still well below the 23% annual
average growth experienced over the previous the ten year period. We do, however, expect
import growth to pick up next year based on low current stock levels in China.
Furthermore, we expect China will need to source more iron ore from other exporters as
bans on mining in Goa and Karnataka in India, along with a blanket 30% duty imposed on
Indian ore exports will reduce Indias supply to the market. We expect that this will mean
that China may have to look further afield for its iron ore needs, in a move that may lend
freight rates some support.
Demand uncertain but
should grow
Chinese steel is growing slowly
Total steel exports up though
While iron ore imports have
also seen low growth

21 December 2012 43
FIGURE 47
Chinese iron ore import seasonality (mt)

FIGURE 48
Brazilian y/y change in iron ore exports (mt)
30
35
40
45
50
55
60
65
70
2009 2010
2011 2012

-2
-1
0
1
2
3
4
5
2005 2006 2007 2008 2009 2010 2011 2012
Source: Reuters, Barclays Research Source: Reuters, Barclays Research
For 2013, we do see pockets of healthy demand in iron ore, although we continue to expect
the rate of net additions to the dry bulk fleet to outpace this rate of growth. Therefore, we
do not think there will be much of an improvement in freight rates over the next two years,
with rates likely to remain pressurised by a slowdown in global economic growth and a
likely slowdown in the growth of Chinese steel production.

With only limited improvement
next year, see freight rates
staying in range

21 December 2012 44
Coal prices and indicators
FIGURE 49
European coal prices
FIGURE 50
FOB coal prices
75
85
95
105
115
125
135
Dec-10 Jun-11 Dec-11 Jun-12 Dec-12
CIF ARA M+1 $/t

50
80
110
140
170
200
Dec-07 Dec-08 Dec-09 Dec-10 Dec-11 Dec-12
Source: EcoWin, Barclays Research

Source: Ecowin, Barclays Research
FIGURE 51
Coal forward curve
FIGURE 52
Coal price volatility
80
86
92
98
104
110
116
122
Sep-12 Dec-12 Mar-13 Jun-13 Sep-13 Dec-13
14/12/2012 02/01/2012 14/06/2012

0
5
10
15
20
25
30
Jun-12 Jul-12 Aug-12 Sep-12 Oct-12 Nov-12 Dec-12
10 day close-to-close coal price volatility

Source: Reuters, Barclays Research
FIGURE 53
CIF ARA contango (M+1 Y+1) ($/t)
FIGURE 54
Dry bulk freight rates
-20
-18
-16
-14
-12
-10
-8
-6
-4
-2
0
Dec-11 Feb-12 Apr-12 Jun-12 Aug-12 Oct-12 Dec-12

0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
Dec 11 Feb 12 Apr 12 Jun 12 Aug 12 Oct 12 Dec 12
BDI BCI BPI


21 December 2012 45
Atlantic Basin fundamentals
FIGURE 55
UK steam coal consumption (mt)
FIGURE 56
Relative costs of generation - spots
0
1
2
3
4
5
6
7
8
2009 2010 2011 2012

-20
-10
0
10
20
30
40
Dec-11 Mar-12 Jun-12 Sep-12 Dec-12
54% v 30% 48% v 36%
Gas SRMC - coal SRMC /MWh
Source: DECC, Barclays Research Source: DECC, NETA, Barclays Research
FIGURE 57
EU 27 imports (mt)
FIGURE 58
US exports to the EU 27 (mt)
12
13
14
15
16
17
18
19
20
2010 2011 2012

0.0
0.5
1.0
1.5
2.0
2.5
3.0
Jan-10 Jun-10 Dec-10 May-11 Oct-11 Apr-12 Sep-12
Source: Eurostat, Barclays Research Source: McCloskeys, Barclays Research
FIGURE 59
Colombian exports by destination (mt)
FIGURE 60
South African exports by destination (mt)
-
1
2
3
4
5
6
Oct-10 Feb-11 Jun-11 Oct-11 Feb-12 Jun-12 Oct-12
Europe
Americas
Asia

0
1
2
3
4
5
6
7
8
Sep-10 Jan-11 May-11 Sep-11 Jan-12 May-12 Sep-12
Europe ROW


21 December 2012 46
Pacific Basin fundamentals
FIGURE 61
Power generation by source

FIGURE 62
Increasing share of Indonesian sub-bit Exports
0 20 40 60 80 100
China
India
South Korea
Japan
Coal Oil Natural Gas
Nucl ear Hydro Others

0%
10%
20%
30%
40%
50%
60%
70%
00 02 04 06 08 10 12
Source: FEPC, Barclays Research Source: FEPC, Barclays Research
FIGURE 63
India power generation
FIGURE 64
Indonesian coal exports by Asian country (YTD)
-5%
0%
5%
10%
15%
20%
Dec-08 Dec-09 Dec-10 Dec-11 Dec-12
Thermal (y/y)
Total (y/y)
China
22%
India
26%
Japan
10%
South Korea
11%
Taiwan
9%
Others
22%
Source: CEA, Barclays Research Source: McCloskeys, Barclays Research
FIGURE 65
Australian coal exports by Asian country (YTD)
FIGURE 66
Monthly thermal coal imports by country
China
19%
Japan
45%
South Korea
17%
Taiwan
10%
Others
9%

0
5
10
15
20
25
30
35
40
45
Oct-10 Apr-11 Oct-11 Apr-12 Oct-12
Japan India China S. Korea (all in mt)
Source: McCloskeys, Barclays Research Source: McCloskeys, Barclays Research

21 December 2012 47
China charts
FIGURE 67
Thermal power registered y/y growth in November

FIGURE 68
Hydropower share normalizing toward year end
-30%
-20%
-10%
0%
10%
20%
30%
40%
50%
60%
Jan-11 Dec-11 Nov-12
Thermal vs. hydro powergen
Thermal % Hydro %

0%
5%
10%
15%
20%
25%
12 1 2 3 4 5 6 7 8 9 10 11 12
months
Share of hydro generation in total
5yr range 2011 2012
Source: NBS, Barclays Research Source: NBS, Barclays Research
FIGURE 69
China import arb closed for Australian coal in December

FIGURE 70
Steam coal imports jumped on open arb
-100
-50
0
50
100
150
200
Jan-12 Mar-12 May-12 Jul-12 Oct-12 Dec-12
RMB/t Arb for imported coal
Arb over Aus coal Arb over Indo coal

-18
-13
-8
-3
2
Oct-05 Oct-06 Oct-07 Oct-08 Oct-09 Oct-10 Oct-11 Oct-12
net exporter
net importer
China's steam coal net trade (Mt)
Source: CCTD, Barclays Research Source: Customs, Barclays Research
FIGURE 71
Coal burn recovered in Q4

FIGURE 72
Freight rate and spot prices softened into year end
270
290
310
330
350
370
390
410
430
450
52 12 24 36 48
'0000t
Weeks
Major power plant coal burn
2011 2012

30
35
40
45
50
55
600
650
700
750
800
850
Jan-12 Mar-12 May-12 Jul-12 Oct-12 Dec-12
RMB
Qinhuangdao prices vs. domestic coal freight (RHS)
5500 kc spot QHD-Guangzhou freight
Source: CCTD, Barclays Research Source: Customs, Barclays Research

21 December 2012 48
COMMODITIES RESEARCH ANALYSTS
Barclays
5 The North Colonnade
London E14 4BB

Gayle Berry
+44 (0)20 3134 1596
gayle.berry@barclays.com
Sijin Cheng
+65 6308 6320
sijin.cheng @barclays.com
Suki Cooper
+1 212 526 7896
suki.cooper@barclays.com
Helima Croft
+1 212 526 0764
helima.croft@barclays.com
Paul Horsnell
+44 (0)20 7773 1145
paul.horsnell@barclays.com
Christopher Louney
+1 212 526 6721
christopher.louney@barclays.com
Sha Luo
+44 (0)20 7773 3994
sha.luo@barclays.com
Miswin Mahesh
+44 (0)20 7773 4291
miswin.mahesh@barclays.com
Kevin Norrish
+44 (0)20 7773 0369
kevin.norrish@barclays.com
Biliana Pehlivanova
+1 212 526 2492
biliana.pehlivanova@barclays.com
Trevor Sikorski
+44 (0)20 3134 0160
trevor.sikorski@barclays.com
Nicholas Snowdon
+1 212 526 7279
nicholas.snowdon@barclays.com
Kate Tang
+44 (0)20 7773 0930
kate.tang@barclays.com
Sudakshina Unnikrishnan
+44 (0)20 7773 3797
sudakshina.unnikrishnan@barclays.com
Shiyang Wang
+1 212 526 7464
shiyang.wang@barclays.com

Commodities Sales
Craig Shapiro
Head of Commodities Sales
+1 212 412 3845
craig.shapiro@barclays.com

Analyst Certification
We, Sijin Cheng, Miswin Mahesh and Trevor Sikorski, hereby certify (1) that the views expressed in this research report accurately reflect our personal
views about any or all of the subject securities or issuers referred to in this research report and (2) no part of our compensation was, is or will be directly or
indirectly related to the specific recommendations or views expressed in this research report.

Important Disclosures:
Barclays Research is a part of the Corporate and Investment Banking division of Barclays Bank PLC and its affiliates (collectively and each individually,
"Barclays"). For current important disclosures regarding companies that are the subject of this research report, please send a written request to: Barclays
Research Compliance, 745 Seventh Avenue, 17th Floor, New York, NY 10019 or refer to http://publicresearch.barcap.com or call 212-526-1072.

Barclays Capital Inc. and/or one of its affiliates does and seeks to do business with companies covered in its research reports. As a result, investors should
be aware that Barclays may have a conflict of interest that could affect the objectivity of this report. Barclays Capital Inc. and/or one of its affiliates
regularly trades, generally deals as principal and generally provides liquidity (as market maker or otherwise) in the debt securities that are the subject of
this research report (and related derivatives thereof). Barclays trading desks may have either a long and / or short position in such securities and / or
derivative instruments, which may pose a conflict with the interests of investing customers. Where permitted and subject to appropriate information
barrier restrictions, Barclays fixed income research analyst(s) regularly interact with its trading desk personnel to determine current prices of fixed income
securities. Barclays fixed income research analyst(s) receive compensation based on various factors including, but not limited to, the quality of their work,
the overall performance of the firm (including the profitability of the investment banking department), the profitability and revenues of the Fixed Income,
Currencies and Commodities Division ("FICC") and the outstanding principal amount and trading value of, the profitability of, and the potential interest of
the firms investing clients in research with respect to, the asset class covered by the analyst. To the extent that any historical pricing information was
obtained from Barclays trading desks, the firm makes no representation that it is accurate or complete. All levels, prices and spreads are historical and do
not represent current market levels, prices or spreads, some or all of which may have changed since the publication of this document. The Corporate and
Investment Banking division of Barclays produces a variety of research products including, but not limited to, fundamental analysis, equity-linked analysis,
quantitative analysis, and trade ideas. Recommendations contained in one type of research product may differ from recommendations contained in other
types of research products, whether as a result of differing time horizons, methodologies, or otherwise. In order to access Barclays Statement regarding
Research Dissemination Policies and Procedures, please refer to https://live.barcap.com/publiccp/RSR/nyfipubs/disclaimer/disclaimer-research-
dissemination.html.

Disclaimer
This publication has been prepared by the Corporate and Investment Banking division of Barclays Bank PLC and/or one or more of its affiliates
(collectively and each individually, "Barclays"). It has been issued by one or more Barclays legal entities within its Corporate and Investment Banking
division as provided below. It is provided to our clients for information purposes only, and Barclays makes no express or implied warranties, and expressly
disclaims all warranties of merchantability or fitness for a particular purpose or use with respect to any data included in this publication. Barclays will not
treat unauthorized recipients of this report as its clients. Prices shown are indicative and Barclays is not offering to buy or sell or soliciting offers to buy or
sell any financial instrument.
Without limiting any of the foregoing and to the extent permitted by law, in no event shall Barclays, nor any affiliate, nor any of their respective officers,
directors, partners, or employees have any liability for (a) any special, punitive, indirect, or consequential damages; or (b) any lost profits, lost revenue, loss
of anticipated savings or loss of opportunity or other financial loss, even if notified of the possibility of such damages, arising from any use of this
publication or its contents.
Other than disclosures relating to Barclays, the information contained in this publication has been obtained from sources that Barclays Research believes
to be reliable, but Barclays does not represent or warrant that it is accurate or complete. Barclays is not responsible for, and makes no warranties
whatsoever as to, the content of any third-party web site accessed via a hyperlink in this publication and such information is not incorporated by
reference.
The views in this publication are those of the author(s) and are subject to change, and Barclays has no obligation to update its opinions or the information
in this publication. The analyst recommendations in this publication reflect solely and exclusively those of the author(s), and such opinions were prepared
independently of any other interests, including those of Barclays and/or its affiliates. This publication does not constitute personal investment advice or
take into account the individual financial circumstances or objectives of the clients who receive it. The securities discussed herein may not be suitable for
all investors. Barclays recommends that investors independently evaluate each issuer, security or instrument discussed herein and consult any
independent advisors they believe necessary. The value of and income from any investment may fluctuate from day to day as a result of changes in
relevant economic markets (including changes in market liquidity). The information herein is not intended to predict actual results, which may differ
substantially from those reflected. Past performance is not necessarily indicative of future results.
This communication is being made available in the UK and Europe primarily to persons who are investment professionals as that term is defined in Article
19 of the Financial Services and Markets Act 2000 (Financial Promotion Order) 2005. It is directed at, and therefore should only be relied upon by, persons
who have professional experience in matters relating to investments. The investments to which it relates are available only to such persons and will be
entered into only with such persons. Barclays Bank PLC is authorised and regulated by the Financial Services Authority ("FSA") and a member of the
London Stock Exchange.
The Corporate and Investment Banking division of Barclays undertakes U.S. securities business in the name of its wholly owned subsidiary Barclays Capital
Inc., a FINRA and SIPC member. Barclays Capital Inc., a U.S. registered broker/dealer, is distributing this material in the United States and, in connection
therewith accepts responsibility for its contents. Any U.S. person wishing to effect a transaction in any security discussed herein should do so only by
contacting a representative of Barclays Capital Inc. in the U.S. at 745 Seventh Avenue, New York, New York 10019.
Non-U.S. persons should contact and execute transactions through a Barclays Bank PLC branch or affiliate in their home jurisdiction unless local
regulations permit otherwise.
Barclays Bank PLC, Paris Branch (registered in France under Paris RCS number 381 066 281) is regulated by the Autorit des marchs financiers and the
Autorit de contrle prudentiel. Registered office 34/36 Avenue de Friedland 75008 Paris.
This material is distributed in Canada by Barclays Capital Canada Inc., a registered investment dealer and member of IIROC (www.iiroc.ca).
Subject to the conditions of this publication as set out above, Absa Capital, the Investment Banking Division of Absa Bank Limited, an authorised financial

services provider (Registration No.: 1986/004794/06. Registered Credit Provider Reg No NCRCP7), is distributing this material in South Africa. Absa Bank
Limited is regulated by the South African Reserve Bank. This publication is not, nor is it intended to be, advice as defined and/or contemplated in the
(South African) Financial Advisory and Intermediary Services Act, 37 of 2002, or any other financial, investment, trading, tax, legal, accounting, retirement,
actuarial or other professional advice or service whatsoever. Any South African person or entity wishing to effect a transaction in any security discussed
herein should do so only by contacting a representative of Absa Capital in South Africa, 15 Alice Lane, Sandton, Johannesburg, Gauteng 2196. Absa
Capital is an affiliate of Barclays.
In Japan, foreign exchange research reports are prepared and distributed by Barclays Bank PLC Tokyo Branch. Other research reports are distributed to
institutional investors in Japan by Barclays Securities Japan Limited. Barclays Securities Japan Limited is a joint-stock company incorporated in Japan with
registered office of 6-10-1 Roppongi, Minato-ku, Tokyo 106-6131, Japan. It is a subsidiary of Barclays Bank PLC and a registered financial instruments firm
regulated by the Financial Services Agency of Japan. Registered Number: Kanto Zaimukyokucho (kinsho) No. 143.
Barclays Bank PLC, Hong Kong Branch is distributing this material in Hong Kong as an authorised institution regulated by the Hong Kong Monetary
Authority. Registered Office: 41/F, Cheung Kong Center, 2 Queen's Road Central, Hong Kong.
This material is issued in Taiwan by Barclays Capital Securities Taiwan Limited. This material on securities not traded in Taiwan is not to be construed as
'recommendation' in Taiwan. Barclays Capital Securities Taiwan Limited does not accept orders from clients to trade in such securities. This material may
not be distributed to the public media or used by the public media without prior written consent of Barclays.
This material is distributed in South Korea by Barclays Capital Securities Limited, Seoul Branch.
All equity research material is distributed in India by Barclays Securities (India) Private Limited (SEBI Registration No: INB/INF 231292732 (NSE), INB/INF
011292738 (BSE), Registered Office: 208 | Ceejay House | Dr. Annie Besant Road | Shivsagar Estate | Worli | Mumbai - 400 018 | India, Phone: + 91 22
67196363). Other research reports are distributed in India by Barclays Bank PLC, India Branch.
Barclays Bank PLC Frankfurt Branch distributes this material in Germany under the supervision of Bundesanstalt fr Finanzdienstleistungsaufsicht (BaFin).
This material is distributed in Malaysia by Barclays Capital Markets Malaysia Sdn Bhd.
This material is distributed in Brazil by Banco Barclays S.A.
This material is distributed in Mexico by Barclays Bank Mexico, S.A.
Barclays Bank PLC in the Dubai International Financial Centre (Registered No. 0060) is regulated by the Dubai Financial Services Authority (DFSA).
Principal place of business in the Dubai International Financial Centre: The Gate Village, Building 4, Level 4, PO Box 506504, Dubai, United Arab Emirates.
Barclays Bank PLC-DIFC Branch, may only undertake the financial services activities that fall within the scope of its existing DFSA licence. Related financial
products or services are only available to Professional Clients, as defined by the Dubai Financial Services Authority.
Barclays Bank PLC in the UAE is regulated by the Central Bank of the UAE and is licensed to conduct business activities as a branch of a commercial bank
incorporated outside the UAE in Dubai (Licence No.: 13/1844/2008, Registered Office: Building No. 6, Burj Dubai Business Hub, Sheikh Zayed Road, Dubai
City) and Abu Dhabi (Licence No.: 13/952/2008, Registered Office: Al Jazira Towers, Hamdan Street, PO Box 2734, Abu Dhabi).
Barclays Bank PLC in the Qatar Financial Centre (Registered No. 00018) is authorised by the Qatar Financial Centre Regulatory Authority (QFCRA).
Barclays Bank PLC-QFC Branch may only undertake the regulated activities that fall within the scope of its existing QFCRA licence. Principal place of
business in Qatar: Qatar Financial Centre, Office 1002, 10th Floor, QFC Tower, Diplomatic Area, West Bay, PO Box 15891, Doha, Qatar. Related financial
products or services are only available to Business Customers as defined by the Qatar Financial Centre Regulatory Authority.
This material is distributed in the UAE (including the Dubai International Financial Centre) and Qatar by Barclays Bank PLC.
This material is distributed in Saudi Arabia by Barclays Saudi Arabia ('BSA'). It is not the intention of the publication to be used or deemed as
recommendation, option or advice for any action (s) that may take place in future. Barclays Saudi Arabia is a Closed Joint Stock Company, (CMA License
No. 09141-37). Registered office Al Faisaliah Tower, Level 18, Riyadh 11311, Kingdom of Saudi Arabia. Authorised and regulated by the Capital Market
Authority, Commercial Registration Number: 1010283024.
This material is distributed in Russia by OOO Barclays Capital, affiliated company of Barclays Bank PLC, registered and regulated in Russia by the FSFM.
Broker License #177-11850-100000; Dealer License #177-11855-010000. Registered address in Russia: 125047 Moscow, 1st Tverskaya-Yamskaya str.
21.
This material is distributed in Singapore by the Singapore branch of Barclays Bank PLC, a bank licensed in Singapore by the Monetary Authority of
Singapore. For matters in connection with this report, recipients in Singapore may contact the Singapore branch of Barclays Bank PLC, whose registered
address is One Raffles Quay Level 28, South Tower, Singapore 048583.
Barclays Bank PLC, Australia Branch (ARBN 062 449 585, AFSL 246617) is distributing this material in Australia. It is directed at 'wholesale clients' as
defined by Australian Corporations Act 2001.
IRS Circular 230 Prepared Materials Disclaimer: Barclays does not provide tax advice and nothing contained herein should be construed to be tax advice.
Please be advised that any discussion of U.S. tax matters contained herein (including any attachments) (i) is not intended or written to be used, and
cannot be used, by you for the purpose of avoiding U.S. tax-related penalties; and (ii) was written to support the promotion or marketing of the
transactions or other matters addressed herein. Accordingly, you should seek advice based on your particular circumstances from an independent tax
advisor.
Copyright Barclays Bank PLC (2012). All rights reserved. No part of this publication may be reproduced in any manner without the prior written
permission of Barclays. Barclays Bank PLC is registered in England No. 1026167. Registered office 1 Churchill Place, London, E14 5HP. Additional
information regarding this publication will be furnished upon request.

EU20253

Coal Outlook Report

Uploaded by

Document Information

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Coal Outlook Report

Uploaded by

Copyright:

Available Formats

Commodities Research

You might also like