(EnergyAsia, August 11 2011, Thursday) — US information and analysis provider IHS Inc said more than one million tonnes of Indonesian coal swaps have been traded and settled against the IHS McCloskey Indonesian Sub-Bituminous FOB marker as of late July.

As the index gains acceptance as a key benchmark for the world’s top thermal coal exporter, the company said IHS McCloskey has also launched the South China CFR marker and “attracted considerable industry interest with a growing number of companies looking to trade swaps against it.”

The Indonesian swaps first traded in January 2010 through broker Ginga Petroleum. Volumes rose significantly in November 2010 when the Singapore Exchange (SGX) launched clearing services for it, quickly followed by the Chicago Mercantile Exchange and the Intercontinental Exchange.

IHS said trade rose to 250,000 to 300,000 tonnes per month in May 2011, which coincided with Marex Spectron starting to offer these swaps as part of its brokerage services in Singapore.

Following on from breaching the one million tonne mark on July 15, IHS said it saw the largest volume of Indonesian swaps trade with 165,000 tonnes going through in one day.

Scott Key, IHS president and chief operating officer, said: “The rapid take-up of these price benchmarks reflects rapidly expanding demand for financial products from coal buyers and sellers in Asia, but also the depth of expertise and unrivalled credibility and reputation that IHS McCloskey enjoys in the international coal market.”

Following the growth in volumes on the Indonesian swaps, the South China CFR marker and its methodology have attracted considerable interest and it has recently been added to Marex Spectron’s Asian coal broking portfolio.

The South China CFR marker is compiled in association with Xinhua Infolink using the IHS McCloskey Coal Marker price methodology. The marker focuses on the price of imports into the South China market. However, as the marker assesses the most competitive traded spot tonne, Chinese domestic prices (excluding tax) provide the basis for the IHS McCloskey/Xinhua Infolink marker when international prices are higher than Chinese domestic prices and China stops importing.

Xinhua Infolink is a leading privately owned, independent Chinese intelligence and insight provider. IHS McCloskey and Xinhua Infolink have collaborated since 2004 on publications and conferences.

IHS said the domestic coastal trade between northern and southern China is around the same volume as the entire international seaborne steam coal market.

The attractiveness of international coal to Chinese buyers is largely dependent on domestic CFR prices. When Chinese domestic prices are lower than international prices, buyers focus on buying domestic spot cargoes.

Marex Spectron has become the first broker to offer coverage of the Chinese coal swaps market. CFR China 5,500 grade swaps are now tradable via Marex Spectron’s live trading screen or through its voice brokering team. The swaps are settled against IHS McCloskey/Xinhua Infolink South China CFR (5,500 kilocalories NAR) marker.