The market for coal contracts is still very small compared with other energy derivatives like gas and electricity, said Margaret Ryan, Platts' coal market specialist and editorial director for coal. She hopes the publication of its indexes will spur activity by giving participants a benchmark on which to price their trades - despite not publishing in real-time.
Brokers from Evolution and United will each independently assess the settlement price for each type of coal trade and send it to Platts, where the two numbers will be averaged.
The index is being touted as the first step in developing more extensive benchmarks that integrate broker knowledge with actual trades being completed. Ultimately, Platts plans to develop a broader-based index series involving all major US coal participants, although no timeframe has yet been specified.