MARKET NEWS. Tuesday, Oct 3, Coal News

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1 Tuesday, Oct 3, 2017 MARKET NEWS Coal News The API2 Cal18 contract opened 15cents higher than Friday s close at $77.40/t as the European energy mix opened marginally higher across all products. The correlation between German Power and European coal failed to hold through the ession with the German Power Baseload Cal18 contract closing flat at 34.70/MWh and the API2 Cal18 contract closing $1.75 higher at $79.00/t. Last week s weakness across the API2 curve appeared to be linked to the softening European power markets and the weakness across Chinese Domestic Futures as reports of stronger hydropower generation in China across the fourth quarter has the potential to weaken demand for coal-fired power consumption. The Chinese markets are closed this week as the nation celebrates a 7 day national holiday concluding on 8 October. Prices for physical produce across Europe fell last week with coal for November delivery best offered at $91.30/t on Friday down $1.70 from a week earlier with reports of an improving outlook in Australia and Russia leading to an increased availability in the Atlantic Basin. Backwardation across the API2 index extended once more with the front quarter spreads particularly well support with the API2 Q417 v Cal18 closing 40cents higher at $10.10/t. The spread between the API2 and NEWC index remained closed to unchanged at the back end with the Cal18 API2 v NEWC spread closing 10cents lower at - $6.45. The Q417 API2 v NEWC spread tightened over the session closing 65cents higher at -$6.50. API 2/API 4 API 4 Bid $ Offer $ Mid $ Chg Bid $ Offer $ Mid $ Chg Pg. 1

2 Iron Ore News Market Comment The market came to a standstill at the absence of Chinese trade participants. There was some uptick in the Tangshan billet prices which rose by RMB30 to RMB3,540, probably fueled by the good official PMIs that China posted in September. During the month, the official PMI rose to a five and a half year high, since 2012 to 52.4 rating, lifting market outlook on the manufacturing prospect in China. Port Inventory According to Umetal's survey of 42 ports in China, the total port inventory stood at million tonnes on Friday, 29 Sep 2017, up 1.66 million tonnes as compared to last Friday, while daily cargoes evacuation decreased by 72,000 tonnes to 2.71 million tonnes. Technical Reports Oil Intraday Support and Resistance - Brent is now trading between the 10 and 20 period EMA s. technical support is at USD and resistance at USD price action is the lead indicator here so market longs should be cautious if we close below USD on the daily chart and tighten risk. However we also see a hidden divergence on the stochastic and the short period RSI which would suggest another upward move is due soon. Iron Ore Volumes: Previous Day Swaps & Futures Product Volume (000's mt) Open Interest 62% ,880 58% 0 0 Lump Premium Options (Swaps & Futures) Product Volume (000's mt) Open Interest 62% 3,190 86,114 Pg. 2

3 Oil News - An armed group forced Libya's giant Sharara oilfield to close late on Sunday, shutting off production of more than 230,000 barrels per day (bpd), the head of the state oil company said. Libya's National Oil Corporation (NOC) declared force majeure on deliveries of Sharara crude, citing "unrest", according to a letter seen by Reuters. NOC Chairman Mustafa Sanalla promised that production would restart by Monday evening. Sanalla told reporters that the armed group, Brigade 30, were demanding the release of group members who had been detained. In comments to Libya's Channel TV station, he said they were guards demanding salary payments. It was unclear if the guards were employed in an official capacity at the field. A statement purporting to be from Brigade 30 said it had closed the field "due to the lack of response by Libyan officials to our repeated demands". It said these included economic development for southern regions, provision of fuel and cooking gas, support for medical facilities, payment of salaries and jobs in Libya's Petroleum Facilities Guard. Sanalla said the NOC was sending sufficient fuel to southern Libya but that widespread smuggling was disrupting deliveries. Sharara has been hit by repeated shutdowns or partial shutdowns this year, caused by blockades imposed by armed groups, security problems and protests. The field, which has been producing up to 280,000 bpd, is crucial to a recovery in Libya's oil output. Production rose above 1 million bpd in June, more than four times the level in mid Sanalla said Sharara was pumping 234,000 bpd before the latest shutdown and that national production had been 1 million bpd on Sunday. Libya is exempt from OPEC-led oil production cuts, and the North African country's revival has complicated the bloc's efforts to bolster global prices. Libya was producing more than 1.6 million bpd before a 2011 uprising led to a political and armed conflict that badly affected its oil industry. Production continues to be hampered by budget constraints and infrastructure damage, as well as groups that trigger shutdowns to press local demands. Sanalla has campaigned against the blockades, touring the country to try to win over local groups. (Full Story) "NOC restates its firm position that no demands can justify criminal shutting of production, and that NOC does not ever negotiate with such terrorist blockaders," the NOC said in its statement on Monday. Last month a group from southwest Libya, near Sharara, threatened to close the field over the detention in Tripoli of two members of a political delegation, though the two-day ultimatum they set passed without the field shutting Pg. 3

4 Physical Summary Platts HSFO Trade Summary: 3 trades 1) Platts HSFO 380CST: FOB Straits: 20kt: Oct 18-22: Mercuria sells to Hin Leong at $328.00/mt INCO2000 (4:29:00.789) 2) Platts HSFO 380CST: FOB Straits: 20kt: Oct 18-22: Mercuria sells to Hin Leong at $328.00/mt INCO2000 (4:29:27.127) 3) Platts HSFO 380CST: FOB Straits: 20kt: Oct 26-30: BP buys from Mercuria at $327.75/mt (4:29:48.684) Pg. 4

5 Platts Gasoil Trade Summary: One trade reported 1)Gasoil 500ppm: FOB Straits: Oct 18-22: 150kb: Hin Leong buys from CAO at MOPS plus 20 cents/b (Deemed pricing Oct 16-23) INCO (4:29:57) PLATTS ASIA MOGAS CARGO MOC: DEAL SUMMARY: EIGHT TRADES RON: FOB Straits: Oct 18-22: Vitol sells to ENOC at $65.55/b for 50kb (4:25:34) RON: FOB Straits: Oct 18-22: Unipec sells to Hin Leong at $65.50/b for 50kb (4:25:58) RON: FOB Straits: Oct 23-27: PTT sells to Hin Leong at $65.40/b for 50kb (4:26:01) RON: FOB Straits: Oct 18-22: Unipec sells to Total at $65.40/b for 50kb (4:26:03) RON: FOB Straits: Oct 28 - Nov 1: Vitol sells to Hin Leong at $65.20/b for 50kb (4:28:09) RON: FOB Straits: Oct 20-24: ENOC buys from Trafi at $65.16/b for 50kb (4:28:45) Pg. 5

6 7. 92 RON: FOB Straits: Oct 23-27: ENOC buys from PTT at $65.30/b for 50kb (4:28:59) RON: FOB Straits: Oct 23-27: ENOC buys from Petrochina at $65.30/b for 50kb (4:29:03) Naphtha deals summary: One Trade 1) Naphtha: CFR Japan: 25kt: H1 Nov/H2 Nov: BP sells to Statoil 1.75 (4:29:09) MGO Date LA/Long Beach New York Rotterdam Houston Rio De Janeiro Fujairah Hongkong Singapore Pg. 6

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