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TheStreet Open House

TSI Coking Coal Indices Form Basis Of New Singapore Exchange Derivatives

SINGAPORE, Aug. 3, 2014 /PRNewswire/ -- The Singapore Exchange (SGX) is utilizing The Steel Index (TSI)'s daily coking coal price indices published by Platts, a leading global provider of energy, metals and commodities information, as the settlement basis for its metallurgical coal futures and swaps contracts launched today.

"The steelmaking industry and the marketplace benefit from more information and we're pleased to be an independent source of physical price references for the spot and futures markets," said Tim Hard, TSI director for Asia.

The Singapore Exchange's two new TSI-based contracts are:  

  • SGX TSI Australia Premium Coking Coal Futures and Swaps, reflecting the value of coal used in steel making as free on board (FOB) in East Coast Australian ports
  • SGX TSI China Premium Coking Coal Futures and Swaps, reflecting the value of coal used in steel making as delivered to Jingtang port in China on a cost and freight (CFR) basis.

In its July 10 announcement of the derivatives contracts and the choice of TSI indexes as the basis for settlement, SGX said it was "addressing the market's needs for more effective risk management solutions on commodities."

The TSI price index - Premium JM25 Coking Coal (CFR Jingtang Port China) – on which the SGX futures and swaps contracts for Chinese imports will be settled and TSI's Premium Coking Coal (FOB East Coast Port Australia) price index, the basis of the other SGX futures and swaps contracts, have data histories from January 2013.  

With today's launch, TSI physical price benchmarks are now the basis for settling SGX commodity contracts for steel, iron ore and coking coal. On March 26, TSI's daily spot ASEAN Hot Rolled Coil (HRC) Imports price index became the basis of SGX's steel futures and derivatives contracts. Since 2009, TSI's Iron Ore 62% Fe fines price index has been the basis for settling and clearing SGX iron ore derivatives. 

TSI, a unit of Platts since 2011, is a leading specialist source of impartial steel, scrap, iron ore and coking coal price information based on spot market transactions. Founded in 1909, Platts is a leading global provider of energy, petrochemical, metals and agriculture information and benchmark price references.

For more details on the methodology underpinning the TSI coking coal price indexes, visit https://www.thesteelindex.com/en/procedures-methodology/.

In addition to SGX, other exchanges feature TSI-based steel or scrap derivatives contracts: LCH.Clearnet, a leading multi-asset class, multi-national clearing house for exchanges and over-the-counter markets; and, CME Clearing Europe, an independent European clearing house. In all cases, settlement prices are the averages of TSI's reference prices published in the expiring month.

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