Impact of new pricing system for coking coal

Impact of new pricing system for Coking system for Coking Coal
Coaltrans Vietnam - September 2010

Argus and coal
• Largest team of coal reporters of any publisher • Coal correspondents inAustralia, Singapore, Beijing, Tokyo, Moscow, London, South Africa, Washington DC and Colombia Washington DC and Colombia • Publisher of leading market indexes – API2, API4, ICI • Publications:
– – – – –Coal Daily International Argus/McCloskey Coal Price Index Report Argus/Coalindo Indonesian Coal Report Argus Russian Coal Coal Daily (US market)

Coking coal spot price assessments
• Dailyassessments of premium hard coking coal launched in April
– – – – – – – CFR China China domestic market CIF East Coast India CIF East Coast India CFR Japan FOB Australia FOB Hampton Roads (high vol and midvol)

• Focus on delivered assessments because supply is coming from broad base into a few markets

Specifications for Asia Pacific
• • • • • • • Total moisture – up to 10% Volatile matter – up to25% Ash – up to 10% Sulphur – up to 0.6% Sulphur – up to 0.6% Free swelling index – 7–9 Coke strength after reaction – 67% min

Methodology
• Argus constructs a weighted average of confirmedtransactions and an average of bid, offers and informed market views.
– Each component is 50% of index – Similar methodology as leading coal indexes API2 – Similar methodology as leading coal indexesAPI2 and API4

• Does not rely exclusively on transactions as the market has only recently moved to quarterly pricing and spot market is fairly illiquid.
– Reduces the possibility of manipulationCoking coal trade flow
• • • • • • • Global coking coal seaborne trade is a third of the size of global thermal coal market. Australia accounts for 2/3rds of world coking coal exports. Japan buys1/5th of seaborne coking coal Japan buys 1/5th of seaborne coking coal imports EU is also about 1/5th of global imports China accounts for 16%; India 10% China, India happy with spot trade and not...