The Asian coal trading community is embracing the API 5 and API 8 indexes for its swap contracts.

The API 5 index represents 5,500 kcal/kg NAR (net as received), high-ash coal shipped from Australia and the API 8 index represents 5,500 kcal/kg NAR coal delivered to south China. Major brokers such as Tullett Prebon, Marex Spectron and Ginga Petroleum started offering trades against the indexes from the beginning of this month.

The indexes were launched jointly by global energy price reporting agency Argus and IHS McCloskey at the beginning of May 2012, and have quickly gained the confidence of the coal trading community as a reliable, independent benchmark for contracts.

Argus Media chairman and chief executive Mr Adrian Binks said: "We are delighted to hear that many market participants are moving to the Argus/IHS McCloskey API 5 and API 8 indexes for use in their contracts. Our API 2 and API 4 price assessments are extensively used throughout the world for pricing and we are pleased that the API 5 and 8 indexes are already being adopted by the market."

IHS publisher John Howland said: "The South China 5,500kc NAR cfr market is probably the most closely watched coal metric with its influence on global markets profound. It is also the major market for high ash Australian coal, so it makes sense that swaps that settle against the API 5 and API 8 indexes are now being brokered together."

Argus and IHS McCloskey publish a series of API indexes, which are used for 90pc of the world's internationally traded coal derivatives. All the API indexes are calculated by averaging the relevant Argus and IHS McCloskey assessments/markers. The IHS McCloskey marker used in the API 8 is the IHS McCloskey/Xinhua Infolink South China (5,500kcal/kg NAR) marker.

Source - Argus Media

(www.coalguru.com)