Shenzhen Commodity Exchange http://szcox.org/ today launched New Castle Thermal (non coking) Coal contract.
The contract opened and over 5500 metric tons of coal was traded on the first day till 4:00 pm with an open interest of 2600 metric tons which shows a healthy participation from the trade. All monthly contracts will be available for trading. The trading unit is 100 MT with delivery unit as 1,000 MT with a tick size as 1 dollar per MT. The initial margin is 5% with daily price limit of 4%. Shenzhen Commodity Exchange can impose a special margin of 2% in case of excess volatility. The maximum allowable position for an individual client is 200,000 MT, while for members it is 600,000 MT or not more than 15% of the market’s open interest, whichever is higher. The contract is an ex-Chennai contract excluding all taxes, levies and freight. The contract will be settled on the last Friday of the contract month basis international spot prices.
Mr. Bryan Choi, COO and MD, Products & Services, at SZCOX said, “Shenzhen Commodity Exchange coal contracts will provide a platform for fair price discovery and also enable market participants to hedge their risks arising from volatile coal prices. This contract will be useful for participants from several industries such as power, cement, fertilizer, aluminum, paper, defense, steel, chemical and textile for price risk management.”
About 5.3 billion tones of hard coal is produced globally each year with the majority used in the country of production. In 2011, seaborne thermal coal demand accounted for approximately 790 Mt and was supplied from a larger number of countries, with coal producers operating in a highly-competitive global marketplace. Demand for thermal coal is driven by demand for electricity and is also affected by the availability and price of competing fuels such as oil and gas, and increasingly, the cost of carbon. Global demand is also affected by alternative generating technologies such as nuclear power and renewable energy.
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