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MATH AVG PRICE OF COAL JUMPED 16% MOM, COAL EXPORTS ARE LIKELY TO HIT TWO BILLION DOLLARS THIS YEAR

As investors around the world are more optimistic that concrete recommendations and solutions for the European debt crisis will be delivered from the G20 meeting held in France, National Statistics Office of Mongolia YTD external trade data shows (as of first nine months of 2011 and all compared yoy to same period of 2010) that

  • Mongolia continued to benefit from favorable top commodity prices YTD virtually for all its export commodities such as coal, copper, iron ore,crude, greasy cashmere, zinc, gold
  • Coal exports this year are likely to hit record 2 billion USD
  • Mathematical average coal price jumped 15.91% mom compared to 2.8% mom in August and compared to 0.92% mom in July and 4.87% mom in June
  • Imports are shooting up due to mining, construction, etc ramp-up

 exports are up 73% yoy to 3.48B USD and consisted from

 Tier 1 commodities

  • coal(MMC(975),MAK(private),TTL(MSE),SGQ(1878),etc) 13 821 500 tons of coal with customs price declaration of 1 536 389 300 USD, volume up 25.4 %, value up 178.3%
  • copper concentrate(EMC,state-owned) 425K tons - 745M USD, volume down 1.1%, value up 32%

Tier 2 commodities

  • iron ore,concentrate(Iron Mining JV,Altai Khuder,Monzol(all private)etc)4.1M tns-300M USD, volume up 76%, value up 82%
  • crude (Donsheng,etc)1.7M barrels worth 176M USD, volume up 14%,value 56%
  • gold  2.8 tons worth 124M USD, volume down 33.2%, value down 7%
  • greasy cashmere,2625 tons worth 115M USD, volume down 12%, value up 20%
  • zinc ore/concentrate(NFC JV) 92K tons worth 112M USD, volume up 6%,value up 19%

Tier 3 commodities

  • fluorspar ore, concentrate (Monros, etc)297K tons worth 71M USD
  • combed goat down, 389K tons worth 41M USD
  • moly ore and concentrate(EMC,state-owned)3K tons worth 35M USD

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COAL METRICS:

  • Value of Mongolian coal exports 2011YTD is 1.53B USD compared yoy to 552M USD, increase of 178.3% Value of total coal exports in 2010 was  878.45M USD. If coal export growth continues at same rate YTD mathematically value of coal exports this year would be 2B USD

FRONTIER SECURITIES forecasts 2011F value at range of 2B USD

Value of coal exports in 2011YTD is 512M USD per quarter, 170M USD per month and 5.7M USD per day.

  • Mathematical average price of Mongolian bituminous coal in 2011YTD is 111.15USD compared to 98.60USD a month ago and compared to 95.89USD two months ago and compared to 95.01 USD three months ago and  compared to 90.59USD four months ago and compared to 75.06 USD per ton as of 04/15/2011 and compared to 69.04USD six months ago and  65.86 USD seven months ago and 60.04USD eight months ago and compared yoy to 50.09  USD per ton yoy. Math average price for Mongolian coal for 2010 was 52.75USD, in crisis 2009 it was 43.05USD, in pre-crisis 2008 it was 44.29USD, in 2007 it was 35.55USD.
  • The trend is still in line with Frontier Securities forecast in early 2011 that this up trend will be supported throughout 2011.

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  • Volume in 2011YTD  is 13 821 500 tons compared yoy to 11 018 000 727 000 tons, 25.4% increase yoy. Volume is 4.6M tons per quarter, 1.53M tons per month and 51190 tons per day. If coal export growth continues at same rate YTD mathematically volume of coal exports this year would be 18.68 million tons
  • FRONTIER SECURITIES forecasts 2011F volume at range of 20Mtpa due to year-end ramp in production and sales

 2015F is 35Mtpa, 2020F is 55Mtpa

  • Volume for 2010 was 16 635 100 tons, in crisis 2009 it was 7 113 200 tons, in pre-crisis 2008 it was 4 169 300 tons, in 2007 it was 3 269 000 tons.

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imports are up 2.1 times yoy to 4.82B USD

Tier 1 products

Diesel Fuel(NIK/Petrovis,Just,Magnai,Sodmongol,etc) 464K tons – 500M USD, volume up 36%,value up 94%

Trucks, 18 457 pieces – 451M USD, volume up 135%, value up 246%

Passenger cars 39 425 pieces-306M USD, volume up 129%,value up 246%

Bulldozers, excavators, graders, road levelers 1678 pieces- 259M USD, volume up 150%, value up 243%

Gasoline (NIK/Petrovis,Just,Magnai,Sodmongol,etc) 234K tons – 240M USD, volume up 13%,value up 47%

Earth, stone sorting mixing machinery 106.9K pieces – 148M USD volume up 298%,value up 268%


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Chief Investment Strategist

Dale Choi

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