Low volatility boosts interest in coal derivatives

Trading houses and hedge funds said to be taking bigger positions


Low volatility in the European coal market is leading to increased trading in financial coal, as commodity trading houses and hedge funds take on bigger positions in pursuit of returns, say market participants.

London-based Prospex Research estimates the financial coal market is on track to grow by 30% in 2014, reaching a record volume of 3,800 million tonnes. Such a rise would come on top of a similar increase of 32% in 2013.

Despite lacklustre prices, a variety of companies are increasing thei