Illinois Basin Coal Futures will be CME’s second physically delivered coal futures contract in North America, building on the company’s suite of coal futures and options products. The futures will be available for trading on the floor and electronically via CME Globex and for submission for clearing through CME ClearPort.
The futures will have a contract size of 1750 short tons, average heat content of 11,500 British thermal units per pound and will be deliverable on the Ohio River.
The Ohio River is a primary corridor in the US coal transport network.
Ash content will be a maximum of 12%, chlorine will be a maximum 0.35% and the contract will allow a maximum of 3.15% sulphur content.
CME Group global energy managing director Gary Morsches said Illinois Basin coal was an established feedstock for the domestic power industry and was expected to be in strong demand in the future.
“As this market continues to expand, our new futures contract will improve price discovery for coal producers, power generators and coal exporters and will offer an effective solution for managing their risk,” he said.
Illinois Basin coal is higher in sulphur than other domestic coals and has heat content ranges between 10,000-12,500Btu/lb. It accounts for about 13% of US production.
By 2040 the US Energy Information Administration forecasts its share of domestic production will grow to 20%, driven in part by technological improvements, including US power plants adopting scrubber technology that reduces sulphur dioxide.
This sulphur dioxide reduction makes Illinois Basin coal a viable alternative to low-sulphur fuels.
