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Interview: Richard Richardson, Head of Asia, globalCOAL

Richard discusses the role of the physical SCoTA contract in thermal coal, the NEWC index and bringing transparency to the metallurgical market.

Richard Richardson began his career as a Freight Charterer and Coal Analyst at Coal Marketing Company (CMC) in Dublin. From
there, he joined globalCOAL for the first time – as a Market Manager at the London HQ. On departing globalCOAL for Asia in 2011,
Richie enhanced his Coal Trading expertise at HC Trading in Singapore. This was followed by his appointment as Thermal Coal Trade Manager at Coeclerici Asia. He rejoined globalCOAL as Head of Asia in March 2014. Richie holds a BA in Management Information Systems (MIS) from Dublin Business School and an MBS in MIS from University College Dublin. 

Your presentation will cover the role of the physical SCoTA contract in thermal coal. Can you give us an insight into what SCoTA is and how it is used?

SCoTA is the foundation stone of commoditisation in the coal market. It was developed in 2000 with the input of coal buyers, coal producers and coal traders and has continuously been refined over the years to adapt to the coal market’s changing conditions. SCoTA defines standard specs and provides a standard set of terms and conditions. This allows for the development of liquidity hubs and from there, the generation of multiple, comparable pricing points (including bids, offers and trades) leads to greater transparency for the market. Additionally, it enables much more efficient trading, making it easier and safer for its users to get in and out of positions. SCoTA is free to use – you can download it from the globalCOAL website after signing a licensing agreement online.

How is the NEWC index developing to cater to increasing volumes of off-spec coal?

The NEWC Index captures the price of high-CV (6,000kcal/kg) thermal coal delivered FOB Australia. Liquidity in the Phys NEWC contract has increased significantly in the last 12+ months, generating more pricing points than ever. This is what makes the NEWC Index the leading coal price benchmark in Asia. Lower CV coal is priced off the NEWC Index all across the Asia-Pacific basin – even India’s CERC and Indonesia’s MEMR use the NEWC Index in their coal/power price benchmarks.

Is globalCOAL planning to launch any new pricing products in the next year or two? Where are likely to be the best opportunities for expansion?

Our main focus at the moment is bringing transparency to the metallurgical market. Using market feedback we’ve developed and refined a new RSS for premium mid volatile met coal, delivered FOB Australia – which plugs into SCoTA. This will be tradeable via the globalCOAL screen from this summer onwards, generating frequent, verifiable pricing points – and bringing much needed transparency to a rather opaque market. In the thermal coal market we are also finalising a CFR South China RSS which will capture 5,500kcal/kg seaborne coal delivered basis Zhoushan Port (with the option of delivery to alternative port subject to a freight differential). With this product we’re hoping to bring more standardisation and more price transparency to the lower CV coal market in Asia, by leveraging activity in one of its most important destinations.

Richard will present a session on Trading the physical coal market at CTRM - Singapore on 15 - 17 September 2015. Find out more.
This content is provided by Coaltrans Conferences for informational purposes only, and it reflects the market and industry conditions and presenter’s opinions and affiliations available at the time of the presentation.

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