The API 5 coal price assessment
The API 5 price assessment is the key price reference used for coal supply agreements in the Australian and Chinese markets. API 5 references a lower-heat product than API 2 or API 4 and is used in physical and over-the-counter contracts. It is calculated as an average of the Argus and McCloskey price assessments for fob Newcastle 5,500 kcal/kg NAR coal.
Advantages of the API 5 coal price assessment
The API 5 price assessment is a highly liquid and robust benchmark price, and an easy-to-use and easy-to-hedge price for coal sales and derivatives. The lower-heat 5,500 kcal/kg coal specification is a common thermal coal type and is replacing 6,000 kcal/kg product for some thermal power generators in Asia-Pacific.
Users of the API 5 coal price assessment
Throughout South African, Australian and Asian coal markets, physical players turn to the API 5 price assessment for supply agreements, transfer pricing and risk management. The API 5 price assessment is widely used as the settlement basis for contracts settled on world futures markets.