What is Premium Low Vol?
Platts Premium Low Vol, or PLV, is the flagship benchmark assessment of S&P Global Commodity Insights' suite of metallurgical coal pricing information, tracking the spot price of physical premium hard coking coal.
The assessment is based on a standard specification of prime-quality low-volatile hard coking coal with 71% coke strength after reaction and 21.5% volatile matter, among other standard specifications.
Coking coal was priced annually until 2010, when quarterly pricing became the most common method.
Since then, the market has continued to evolve towards shorter-term pricing, and every year a greater share of global metallurgical coal is linked to spot indices.
Since its launch in 2010, PLV has been the most referenced coking coal index in the global physical market, and it is also the underlying settlement basis for the most liquid derivative swap contract.
By its design, PLV is a regional benchmark for the Asia-Pacific basin, but the importance of the combined Australian export and China import flows has made PLV a globally-relevant and referenced assessment.
As part of the assessment process, coals delivered on quality, location and timing dimensions differing from those underlying PLV are normalized using differentials which are kept updated in order to remain reflective of current market practice.
PLV is the go-to metallurgical coal index for global coking coal, metallurgical coke and steel contracts requiring a daily market price for premium-quality coking coal, rather than a fixed price.
PLV and Platts' accompanying metallurgical coal and coke assessments by S&P Global have brought increased transparency to an industry which has been seeking more effective methods of tracking daily price movements.
It has also facilitated the widespread emergence since 2012 of floating price deals for spot and term physical cargoes, which since 2014 have increasingly been hedged using positions in the financial derivatives market.