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Mastering the Commodities Markets by Francesca Taylor

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TRADING WITH COAL FUTURES

The ICE contract, which is a cash settled contract, is linked to a final closing price which is an index. As the coal does not need to be physically transported these types of cash settled contracts lend themselves to trading rather than hedging. Coal futures are cash settled via one of the key Argus indices (Argus is one of the key information providers in the commodities markets).

  • API 2 – The standard reference price benchmark for coal imported into north-west Europe.
  • API 4 – The benchmark price for coal exported out of South Africa’s Richards Bay terminal.
  • API 6 – An average of Argus and McCloskey’s FOB Newcastle assessments for coal exported out of Australia.

Table 5.3 shows the Rotterdam Coal ICE futures contract. ...

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