TSI Benchmarks are defined as having physical supply linked to them, and/or derivative contracts. These three indices meet both criteria.

Year-on-year comparisons show a marked price retreat (May to-date 2015 vs May 2014).

Tempered Chinese demand is affecting prices, but so is burgeoning supply.

Key TSI Benchmark prices down

May ‘15 TD*

May ’14*

-50

-40

-30

-20

-10

0

TSI Australia FOB Coking Coal TSI ASEAN CFR HRC TSI 62% Iron Ore

117.02

86.21 546.65

378.57 100.56

60.19

US$/t US$/dmt US$/t %

*Monthly averages

Source: Australian Bureau of statistics Source: China Customs Data

2

3

4

5

6

7

8

2013 2014 2015

January February March

10

11

12

13

14

15

16

17

2013 2014 2015

January February March

Australian Metallurgical Coal Exports Chinese Metallurgical Coal Imports

Mil

lio

n T

onnes

Mil

lio

n T

onnes

Supply and demand in key producing and consuming nations are heading in different directions

Coking coal supply/demand mismatch

Prices are a function of supply and demand. Weakness in coking coal prices recently are

highly explicable when viewing 3 year trends on production levels and consumption levels.

A demand pick-up in China is anticipated, but will it reverse a hitherto structural trend?

Source: Australian Bureau of statistics Source: China Customs Data