The focus of global coal market is shifting eastward

In January 8th, Chicago has released a research report said that the diversification of buyers and sellers of coal market in Asia, the region has become an important place for price discovery. With the continuous development of Asia and the entity of the coal market, the demand for risk management in the region are on the rise. Effect of power plant, coal mine and coal traders using derivatives to protect their own profit space from price changes, the current world coal producers and exporters are looking at India, Chinese and demand in japan.

PVA 1788 (PVA BP17)

Chicago Institute of energy research and product development department director general manager Owain Johnson said that the coal price risk management in Asia, traditionally behind Europe, operating in a competitive environment of the Asian power company is also one of the few. They are usually able to fuel the rising costs onto consumers, so the demand for risk management is not high. But the situation is gradually changing. Japan and other Asian countries introduced liberalization measures in electric power industry. While Chinese countries such as power plants, in order to maintain industrial competitiveness, but also find the dynamic hedge to reduce fuel costs.

In fact, the market price of coal base, has traditionally been the import market in northwest Europe or South Africa and Australia under the export location. However, with the growing importance of Asia, is the rise of a new benchmark. The Chicago based on Argus/Coalindo for the Indonesian export sub bituminous coal to the baseline at the end of 2018, launched the Indonesia coal futures. Since listing, the contract volume of nearly 2 million tons, positions also maintained a growth trend.

Owain Johnson said that Indonesia coal futures is still in its infancy, but the regional benchmark may be more representative of the future direction of the coal market. As the northern hemisphere has slowed, Asian demand growth, the coal market is moving east, the market is undergoing a major transformation of the pattern of trade.