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ICI4 Indonesian coal export derivatives contract growing

Tim Hard
Tim Hard

The CME Group launched futures contracts for Indonesian export thermal coal in February 2018 based on the ICI 4 index. Trading volumes started slowly but increased rapidly in March, with over 50,000 tonnes traded in the first five days of the month matching the total volume for the entire month of February. Market participants see increasing interest in the new contract and expect more companies to start trading. As Indonesia is the largest global exporter of thermal coal, the new contract provides an important risk management tool for companies in the coal industry.

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Trading momentum builds on Indonesian Thermal Coal derivatives Market Reporting Consulting Events Coal illuminating the markets The CME Groups new Indonesian export GAR 4,200 kcal/kg coal derivatives contract (based on the ICI 4 index ) was launched successfully on 5 February, with a trade on the first day. The ICI contract picked up a further two trades in its first month to a totalof30,000, before the Lunar holidayinevitably slowed trade. Trading in March has picked up briskly, matching the February full-monthtotalinthefirstfivetradingdays.Bycloseoftrading on 9 March volumes were already at 50,000t. This has potential, said Evolution Markets managing director Thomas Hiemstra. We see increased interest in ICI 4. Asthe developmentofthe productcontinues, we expectmore companies signing up and trading. CMEs senior director of energy products Nicolas Dupuis said were getting lots of inbound questions about ICI 4, as this new contract provides market participants in the region with an effective risk management tool. Indonesia is the worlds largest thermal coal exporter, after all. We have completed more onboarding this week, as interest in this new contract continues to grow. The ICI 4 index is a key regional benchmark for thermal coal exports, with the majority of physical market index linkage being tied to it. The listing by CME Groups Nymex exchange, has given coal producers, trading firms and buyers in the region the opportunity to manage price risk more effectively. The ICI 4 index applies to 4,200 kcal/kg GAR thermal coal shipped from Indonesia (Kalimantan), and is the reference price for low-heat value coal traded in the Asia-Pacific market. But it may have uses beyond this calorific grade, with notable correlations to 5,000 GAR and 5,800 GAR fob Indonesia, and market participants saying they would consider using it as a proxy for 3,800 and 3,400 GAR coals. Singapore | 13 March 2018 ICI4 trading picks up speed in March 4,200 GAR Correlations to higher calorie grades sustained Contact us for more information: Singapore@argusmedia +64 6496 9898 Scan the QR code here http://www.linkedin.com/groups/Argus-Asia-Coal-4678737/about

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ICI4 Indonesian coal export derivatives contract growing

  • 1. Trading momentum builds on Indonesian Thermal Coal derivatives Market Reporting Consulting Events Coal illuminating the markets The CME Groups new Indonesian export GAR 4,200 kcal/kg coal derivatives contract (based on the ICI 4 index ) was launched successfully on 5 February, with a trade on the first day. The ICI contract picked up a further two trades in its first month to a totalof30,000, before the Lunar holidayinevitably slowed trade. Trading in March has picked up briskly, matching the February full-monthtotalinthefirstfivetradingdays.Bycloseoftrading on 9 March volumes were already at 50,000t. This has potential, said Evolution Markets managing director Thomas Hiemstra. We see increased interest in ICI 4. Asthe developmentofthe productcontinues, we expectmore companies signing up and trading. CMEs senior director of energy products Nicolas Dupuis said were getting lots of inbound questions about ICI 4, as this new contract provides market participants in the region with an effective risk management tool. Indonesia is the worlds largest thermal coal exporter, after all. We have completed more onboarding this week, as interest in this new contract continues to grow. The ICI 4 index is a key regional benchmark for thermal coal exports, with the majority of physical market index linkage being tied to it. The listing by CME Groups Nymex exchange, has given coal producers, trading firms and buyers in the region the opportunity to manage price risk more effectively. The ICI 4 index applies to 4,200 kcal/kg GAR thermal coal shipped from Indonesia (Kalimantan), and is the reference price for low-heat value coal traded in the Asia-Pacific market. But it may have uses beyond this calorific grade, with notable correlations to 5,000 GAR and 5,800 GAR fob Indonesia, and market participants saying they would consider using it as a proxy for 3,800 and 3,400 GAR coals. Singapore | 13 March 2018 ICI4 trading picks up speed in March 4,200 GAR Correlations to higher calorie grades sustained Contact us for more information: Singapore@argusmedia +64 6496 9898 Scan the QR code here http://www.linkedin.com/groups/Argus-Asia-Coal-4678737/about