Mon Aug 29, 2011
MANILA Aug 29 (Reuters) - Credit Suisse said on Monday it had completed the first ever coking coal swap transaction via a new over the counter contract cleared by the CME Group .
The contract was between Credit Suisse and an unnamed coal industry participant involving 60,000 tonnes of the steelmaking raw material and settled against the Platts Australian coking coal index, the investment bank said.
The Platts index stood at $289 per tonne, free on board Australia on Friday, Credit Suisse said.
The transaction comes more than three years after Credit Suisse and Deutsche Bank (DBKGn.DE: Quote) co-launched an over the counter iron ore paper market by offering cash-settled swaps settled against index-based reference prices.
"This is the missing piece of the jigsaw puzzle that enables mills to hedge all of their variable costs," Kristian Thunes, Credit Suisse's global head of freight and iron ore, said in a statement, adding the company expects the swap volumes to increase rapidly.
Officials at CME and Credit Suisse did not disclose the price, saying it was a private transaction.
Prices of hard coking coal are around $300 a tonne from about $200 a tonne a year ago, because of logistical bottlenecks and tighter supply due to flooding which hit top producer Australia earlier this year.
The size of the first swap trade "bodes well for future activity," said CME spokesman Jeremy Hughes.
The volume of iron ore swaps cleared globally rose to an all-time high of more than 4 million tonnes in July, valued at more than $700 million. The bulk of that, or 3.92 million tonnes, was cleared by the Singapore Exchange.
Spot iron ore prices climbed to record highs above $190 a tonne in mid-February, aided by booming demand from top steel producer China.
MANILA Aug 29 (Reuters) - Credit Suisse said on Monday it had completed the first ever coking coal swap transaction via a new over the counter contract cleared by the CME Group .
The contract was between Credit Suisse and an unnamed coal industry participant involving 60,000 tonnes of the steelmaking raw material and settled against the Platts Australian coking coal index, the investment bank said.
The Platts index stood at $289 per tonne, free on board Australia on Friday, Credit Suisse said.
The transaction comes more than three years after Credit Suisse and Deutsche Bank (DBKGn.DE: Quote) co-launched an over the counter iron ore paper market by offering cash-settled swaps settled against index-based reference prices.
"This is the missing piece of the jigsaw puzzle that enables mills to hedge all of their variable costs," Kristian Thunes, Credit Suisse's global head of freight and iron ore, said in a statement, adding the company expects the swap volumes to increase rapidly.
Officials at CME and Credit Suisse did not disclose the price, saying it was a private transaction.
Prices of hard coking coal are around $300 a tonne from about $200 a tonne a year ago, because of logistical bottlenecks and tighter supply due to flooding which hit top producer Australia earlier this year.
The size of the first swap trade "bodes well for future activity," said CME spokesman Jeremy Hughes.
The volume of iron ore swaps cleared globally rose to an all-time high of more than 4 million tonnes in July, valued at more than $700 million. The bulk of that, or 3.92 million tonnes, was cleared by the Singapore Exchange.
Spot iron ore prices climbed to record highs above $190 a tonne in mid-February, aided by booming demand from top steel producer China.
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