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Coal mine

First API5 OTC term deal trades arranged through Marex Spectron

Global commodities and financial markets brokerage Marex Spectron Group has completed the arrangement of a term deal for Australian 5500NAR high ash thermal coal, intended for delivery throughout 2014.

The transaction was concluded between an Australian producer and an Asian utility.
The deal was the first brokered term deal executed with price reference to Argus / McCloskey’s API5 Index, which has been credited with providing market participants with a more precise reflection of the market for mid-CV high ash thermal coal in the Asia Pacific region.
“This transaction is further testament to the growing confidence in, and use of API5 as the effective price benchmark for Australian producers, Asian end users and global traders of mid-CV Australian thermal coal,” says Matthew Thomas, global head of physical coal at Marex Spectron.
Launched in May 2012 by price assessment providers Argus and McCloskey, the API5 contract tracks free-on-board (FOB) prices of high ash coal from Newcastle, Australia. The basis is 5,500 net calorific value, a quality of coal commonly traded into China, Korea, India and Taiwan for electricity generation and wider industrial use. Together with API8, the corresponding contract for delivery into China, the API5 is receiving increased attention among traders for benchmarking, floating price arrangements and risk management through cleared derivatives.
Marex Spectron is also a broker of other coal markets (physical and paper) from its offices in the UK, US and Singapore. 

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