Hedging Low-Grade Indonesian Coal
Physical Indonesian coal exposure is difficult to hedge and market participants often suffer from poor correlations and severe illiquidity. To promote effective price risk management for all active participants across the value chain, CME Group has introduced an ICI 4 indexed financially settled contract.
ICI 4 is one of five price assessments published in the Argus/Coalindo Indonesian Coal Index Report, that provide direct, independent and reliable valuations for Indonesian coal. The figures supplied are for varying coal grades 6,500 (ICI 1), 5,800 (ICI 2), 5,000 (ICI 3), 4,200 (ICI 4) and 3,400 (ICI 5) kcal/kg GAR. At 4200 kcal/kg, ICI 4 represents a lower grade coal that attracts significant physical trading in Asia (around 90 MTPA). The last 18 months have seen a rapid migration towards ICI 4 index-linked physical contracts in the Indonesian space.
With a strong presence in international coal, CME Group is committed to providing a reliable and liquid futures to manage your risk. The NYMEX ICI 4 futures contract gives hedgers and producers the opportunity to better manage their Indonesian price exposure.
The foundation of CME ClearPort is the strength of the CME Clearing and its market-leading risk management. The benefits of CME Clearing include:
- Instant confirmation that a trade is cleared — no delays while credit checks are carried out
- A fund that ensures the safety and soundness of your cleared positions
- 24-hour monitoring by an experienced risk management team
|Clearing||Globex||Floor||ClearPort||Product Name||Exchange||Product Group||Subgroup||Category||Subcategory||Cleared As||Volume||Open Interest|
|ICI||ICI||–||ICI||Coal (ICI 4) Indonesian Coal Index (Argus/Coalindo) Futures||NYMEX||Energy||Coal||–||–||Futures||5||110|