Platts updates the proposal to merge TSI and Platts Premium Hard Coking Coal price series

• Platts proposes to move effective date to April 1, 2021
• Platts revises proposed quality specifications
• Platts clarifies the proposed location basis
• Platts proposes to launch Mid Vol assessment

S&P Global Platts updates the proposal to merge the TSI Premium Hard Coking Coal FOB East Coast Australia index (TS01034) and the Platts Premium Low Vol HCC FOB Australia assessment (PLVHA00), effective April 1, 2021.

The updated proposal includes amendments to the effective date, quality and location, and a proposal to launch a new Premium Mid Vol hard coking coal assessment.

The original proposal can be found in the subscriber note published 22 May (http://plts.co/CzN430qVcSJ).

EFFECTIVE DATE: Platts proposes to change the effective date of the potential merger to April 1, 2021, from the previously considered January 4, 2021. This would align the change with the most common annual metallurgical coal contracting cycle and minimize disruption to market participants.

QUALITY : Following market feedback and further review of the latest quality specifications of Premium Low-Vol hard coking coals in the market, Platts has revised the originally proposed specification. This would more closely align it to premium low-vol coals in the market. All premium mid-vol hard coking coals would continue to be assessed and normalized to the Platts defined PLV benchmark specification. Based on Platts evaluation, the proposed new specifications would not amount to any meaningful value difference for the assessment relative to its previous specifications or relative to the major premium hard coal brands trading in the physical market. Specifically, the proposed specifications are as follows:

Affected price series: TSI PHCC index, the PLV HCC assessment, and other seaborne and port stock assessments that are related to the PLV HCC assessment. The list of affected price series is as follows:

Description Symbol

TSI Premium Hard Coking Coal Australia Export FOB East Coast Port TS01034

TSI Prem JM25 Coking Coal China Imports CFR Jingtang Port TS01044

Premium Low Vol HCC FOB Australia PLVHA00

Prem Low Vol HCC FOB Australia (China netback) PLVHD00

Premium Low Vol HCC CFR China PLVHC00

Premium Low Vol HCC CFR India PLVHI00

Prem Low Vol Ex-Stock Jingtang AAWZN00

Prem Low Vol CFR Jingtang Equivalent AAWZO00

Met Coal Prem Low Vol Import-Port Stock CFR China Differential PLVHL04

LOCATION: Platts proposes to change the location basis of TSI PHCC assessment to Hay Point, Australia, from the existing FOB East Coast Port Australia, in line with the Platts PLV HCC assessment. Cargoes loading from other ports in Australia and elsewhere would continue to be reflected, but would be normalized to the stated basis location. Affected price series: Premium Low Vol HCC FOB Australia (PLVHA00), TSI Premium Hard Coking Coal Australia Export FOB East Coast Port (TS01034), and Prem Low Vol HCC FOB Australia (China Netback) (PLVHD00).

PREMIUM MID VOL: As part of the overall enhancement of its coverage, Platts also proposes to launch new Premium Mid Vol assessments, which would be expressed as on-day price differentials to Premium Low Vol HCC, effective October 1, 2020. The new assessments would represent a convenient marker to track the price difference between these two types of premium hard coking coal on FOB Australia, CFR China and CFR India basis. Platts proposes the following PMV base specifications, in alignment with the prevailing specifications found in the market in this category of coal.

The other elements of the original proposal made to the market on May 22 remain unchanged, and additional feedback on those elements is welcome until July 22:

DATA TREATMENT: Platts proposes to change the TSI PHCC methodology to one also considering indicative bids and offers, mirroring the process used in the Platts PLV HCC assessment. Following periods of reduced liquidity resulting from market events in April 2017, September 2019 and April 2020, Platts has received feedback supportive of such a move. The Platts PLV HCC is assessed according to Market-on-Close principles, taking into account tested transactions, bids, offers and indicative data from a multitude of market participants. The data is prioritized in line with a clear data hierarchy and the process is explained in the accompanying daily rationale. Affected price series: TSI Premium Hard Coking Coal Australia Export FOB East Coast Port (TS01034).

TIMESTAMP: To align the TSI PHCC index with other assessments across metallurgical coal and the ferrous value chain, including iron ore, steel and ferroalloys, Platts proposes to publish it as an end-day value with a timestamp of 5:30 pm Singapore time (0930 GMT). At present, the TSI PHCC index takes into account data reported until 6 pm Singapore time and is calculated as a volume-weighted average. Affected price series: TSI Premium Hard Coking Coal Australia Export FOB East Coast Port (TS01034).

TIMING: Following analysis of spot transaction laycans since January 2019, Platts proposes to change the timing of the Platts PLV HCC assessment to representing cargoes loading 7-60 days forward from the current 7-45 days forward, in line with the loading window of the TSI PHCC index. As is the case in Platts methodology, where a time structure is observed in the physical market, cargoes loading within this loading window are normalized to the mid-window day, in this case the 33rd day forward. Affected price series: Premium Low Vol HCC FOB Australia (PLVHA00) and Prem Low Vol HCC FOB Australia (China Netback) (PLVHD00) assessments. Platts also proposes to change the delivery timing for the assessments with CFR incoterms to delivery in 20-75 days, from the current delivery in 20-60 days. Affected price series: Premium Low Vol HCC CFR China (PLVHC00) and Premium Low Vol HCC CFR India (PLVHI00).

QUANTITY: Platts proposes to change the volume basis of the TSI PHCC assessment to minimum 10,000 mt, in line with the Platts PLV HCC specification, from the present minimum 15,000 mt. The change would accommodate data on cargoes shipped in a single hatch on smaller Panamax vessels. Affected price series: TSI Premium Hard Coking Coal Australia Export FOB East Coast Port (TS01034).

Aligning the methodologies would mean that the TSI PHCC and Platts PLV HCC price series would be published as two identical values from April 2021. This would have the added benefit of eliminating the basis risk for market participants looking to hedge their PLV HCC-linked physical coking coal exposure via the derivatives contracts settling against the TSI PHCC index.

The new and amended assessments would be published in SBB Steel Markets Daily, Coal Trader International, on the real-time Platts Metals Alert on fixed pages 1064, 205, 1051, 1062, and in the Platts price database under the symbols mentioned above.

Please send comments, questions and other feedback on these proposals by July 22, 2020 to pl_cokingcoal@spglobal.com, tsimetcoal@spglobal.com and pricegroup@spglobal.com.

For written comments, please provide a clear indication if comments are not intended for publication by Platts for public viewing. Platts will consider all comments received and will make comments not marked as confidential available upon request.