SUBSCRIBER NOTE: Platts proposes revising Premium HCC FOB Australia assessment process

Platts has been reviewing whether to assess premium hard coking coals FOB Australia without using Panamax freight calculations from delivered China transactions. Platts has observed during its market reporting over the past year that the volume of spot transactional data has increased for cargoes sold FOB Australia to all destinations.

At the same time, China remains the clearing spot market as the dominant consumer of seaborne metallurgical coal -- although its consumption of imported premium coking coals has declined, according to Platts trade data. Historically, there has been a large variance in spot prices in prime hard coking coals reportedly achieved for cargoes sold on an FOB Australia basis, for destinations other than China. At the same time, Platts has observed and reported that prime hard spot prices for CFR China have been consistent.

However, in a declining spot market, the price variability across countries other than China has narrowed. Platts maintains this suggests that spot pricing of the FOB Australia market outside of China has become more efficient, uniform and transparent.

Armed with increasingly sufficient and consistent FOB price data, which adhere to Platts' editorial standards, the prime hard coking coals FOB Australia assessment should fully reflect FOB trade activity going forward.

Platts proposes that this process will start April 1, 2016. Platts maintains the option, however, to reflect CFR trade activity in the absence of FOB data if necessary. Should this occur, it will be clearly noted in the accompanying market commentary and assessment rationale.

The clarified assessment process will not affect Platts assessments for Premium HCCs on a CFR China basis and it will be assessed independently -- unless there is a severe swing in spot liquidity.

Please address any further feedback or questions to: Annalisa Jeffries, annalisa.jeffries@platts.com, and Edwin Yeo, edwin.yeo@platts.com, with a cc to pricegroup@platts.com, by January 31, 2016.

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.