The first coal swap deal based on an Australian price index has been carried out in the Asian coal trading market.
The API 5 index represents the price for exporting 5,500 kcal/kg (kilocalories per kilogram) coal from Australia and was launched last year by global energy price reporting agency Argus and IHS McCloskey Coal. It is believed to be an independent price assessment for trading coal, with Argus announcing the first deal was brokered by Marex Spectron in Asia.
Ivan van Niekerk, Head of Coking and Thermal Coal at Standard Bank, which was one of the counterparties said: “This is another small but significant step in the evolution of the Asian coal market and we are pleased to be able to participate in the ongoing commoditisation of coal. Coal indexation and the accompanying risk management tools such as these swaps contracts provide producers, end-users and other market participants with more flexibility in their respective businesses.”
Argus claims interest in the API 5 index and the API 8 index, which represents the same quality coal shipped to China, is growing and is driven by the strong rise in coal demand from India and China in recent years.
Argus and IHS McCloskey Coal publish a series of API indexes, which they claim are used for 90% of the world’s internationally traded coal.