JFX gets nod for coal contract

The Jakarta Futures Exchange (JFX) has received government approval to launch a coal futures contract, an official at the exchange said, a first for Indonesia as it moves toward playing a more influential role in commodity pricing, The Jakarta Post reported on Friday.

?Commodity Futures Trading Regulatory Agency [CoFTRA] has approved Jakarta Futures Exchange to trade a physical coal contract. The approval has just been issued,? CoFTRA chief Sutriono Edi said on Thursday.

The JFX will be the first Indonesian exchange to trade a physical coal contract, Andam Dewi, a consultant working for JFX, said. ?We plan to launch the physical coal contract in April.?

Currently most of Indonesia?s coal is traded business-to-business with pricing referenced to regional benchmarks such as Australia?s Newcastle weekly spot index, Pandu Sjahrir, chairman of Indonesian Coal Mining Association?s commercial division.

?If they want to hedge or take some type of derivative positions usually those markets are made by banks. A lot of it is actually traded through Singapore or Hong Kong, so it?s not an Indonesian market.?

The new contract would better reflect real prices of Indonesian coal, as miners often say existing benchmarks are out of sync with local market conditions and coal specifications.

The new coal contract specifications:
- Lot size is equal to 1 ton
- Prices quoted in US$ per ton
- Tick price increment is 50 US cents per ton
- The minimum quality of coal traded (calorific value) is 5,500 kilocalories per kilogram (kg) air-dried base (ADB) or 4,550 kilocalories per kg as received (AR)
- Maximum moisture content is 30 percent for AR
- Maximum inherent moisture 15 percent for ADB
- Maximum ash content of 8 percent ADB
- Maximum volatile matter39 percent ADB
- Minimum fixed carbon 38 percent ADB
- Maximum sulphur content 12 percent ADB
- Trading hours are 13:00 to 16:00 Jakarta time (GMT+) (*)