Platts is applying a “normalization” value, expressed as a percentage of total price an in US dollars per metric tonne, to each 15 of additional ash content in thermal coal within the published standard range of 17-23%.
This makes apparent the premium and discounts that can arise within single grade of coal.
While like-kind in quality, coals can vary due to their individual chemical properties.
Prior to this “normalization”, Platts used to consider ash content in the 17-23% range and normalize it to a standard 20% specification.
The methodology change applies specifically to Platts’ price assessment process for free on board Newcastle 5500 NAR 17-23% ash. This is an assessment for thermal coal loaded FOB at Newcastle, Australia with a calorific value of 5500 kilocalories per kilogram and delivered seven to 45 days forward on a net-as-received basis.
Platts senior managing editor senior international coal James O’Connell said the valuation mechanism was an important methodology.
“For the first time buyers and sellers in the spot market have access to pricing methodology that brings a higher degree of precision to coal valuation by accounting for variations in ash, which can be wide-ranging,” he said.
“Any time you can fine-tune pricing for quality nuances, it would not be unreasonable to expect a knock-on effect of increased market confidence and deeper liquidity.”