First Australian spot coal deal done against Argus-IHS API 5 index
Singapore, 8 February 2013
The first API 5-linked over-the-counter (OTC) coal spot deal has been transacted, global energy and commodity price reporting agency Argus announced today. The deal, brokered by Marex Spectron, was for a 75,000t shipment of NAR 5,500 kcal/kg coal from Newcastle.
The API 5 index was launched jointly by Argus and IHS McCloskey Coal at the start of May 2012 and has quickly gained the confidence of the coal trading community as a reliable, independent price assessment. A two-year physical contract for coal deliveries linked to API 5 was signed in November and the first API 5-linked swap deal was done last week. Australian coal exports have been increasing from year-earlier levels, although coal exports in 2011 were reduced by heavy flooding in Queensland.
“This is a hugely exciting development for the Australian market, not to mention the broader Asia-Pacific region, since the ability to manage price risk by buying or selling index-linked to key markets such as China, South Korea and India on a fob basis (or cfr China with API 8) for high-ash thermal coal simply makes good sense and is long overdue,” said Matt Thomas, the head of physical coal at Marex Spectron. Marex Spectron, which has traded fixed-price swap deals for API 5 and API 8, expects volumes to increase exponentially in physical and swaps markets once API 5 becomes a cleared product in the near future.
Argus Media chairman and chief executive Adrian Binks said: “We are pleased to contribute to transparency in the Asian coal market with a growing number of API price indexes. This is another significant step in the evolution of the Asian coal market.”
Argus and IHS McCloskey Coal publish a series of API indexes, which are used to settle close to 90pc of the world’s internationally traded coal derivatives.
The methodologies used to derive the Argus and IHS McCloskey prices are available online at www.argusmedia.com/methodology and www.mccloskeycoal.com
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About Argus Media
Argus is an independent media organisation with nearly 500 full-time staff. It is headquartered in London and has offices in each of the world’s principal energy centres. Its main activities comprise publishing market reports containing price assessments, market commentary and news, and business intelligence reports that analyse market and industry trends.
More than half of Argus’ staff are commodity journalists who specialise in reporting news and price information relating to physical energy and related commodity markets.
They operate according to a rigorous Editorial Code of Conduct and an Ethics Policy that align with best journalistic practice, including the avoidance of conflicts of interest. Argus is a leading provider of data on prices and fundamentals, news, analysis, consultancy services and conferences for the global crude, oil products, natural gas, electricity, coal, emissions, bioenergy, fertilizer, petrochemical and transportation industries. Data provided by Argus are widely used for indexation of physical trade. Companies, governments and international agencies also use Argus information for analysis and planning purposes.
Argus has 19 offices globally, including London, Houston, Washington, New York, Calgary, Rio de Janeiro, Singapore, Dubai, Beijing, Tokyo, Sydney, Moscow, Astana and other key centres of the energy industry. Argus was founded in 1970 and is a privately held UK-registered company.