SPIMEX LAUNCHES A PILOT PROJECT FOR TRADING WITH POWER-GENERATING COAL

The pilot project started with trading with the most commonly used D grade coal, the buyers of which are both large companies and small consumers

On 20 December 2019, St Petersburg International Mercantile Exchange (SPIMEX) launched a pilot project for exchange trade with power-generating coal.

“Launching exchange trade with power-generating coal is, undoubtedly, an important step towards increasing price transparency of the industry, a tool for objective assessment of the transport component, which has a considerable share in the commodity value”, pointed out Sergey Mochalnikov, Director of the Coal and Peat Industry Department, of the Ministry of Energy. “Throughout 2019, the Ministry of Energy monitored how coal companies complied with the Regulations on information disclosure, as well as was informing economic entities on a regular basis about possibility to obtain training about registering off-exchange transactions at SPIMEX. It is worth noting coherent work of the Coal Sub-Committee at FAS Exchange Committee, thanks to which exchange trade with coal has become possible on a regular basis. Launching trade with power-generating coal brings us closer to resolving federal goals on competition development”.

Head of FAS Department for Regulating the Fuel-and-Energy Complex and the Chemical Industry, Dmitry Makhonin pointed out: “In Q2 2020 we plan to reach regular coal trading with uniform sale, it will help form exchange indicators FAS also expects that in H1 2020 work of the Commodity Pool Operator will be organized on the coal exchange market”.

“More than 6 million tons of hard power-generating coal, grade D are produced annually in the coal pits of “Russian Coal” in the Krasnoyarsk territory and the Republic of Khakassia. This type of fuel is popular both on the domestic and world markets. We are interested in employing exchange mechanisms to attract new customers. Today [20 December] the first deal is concluded at SPIMEX. Hopefully, opportunities of this new, high-technology commodity sales site will enable us to further build up production facilities and scope of sales”, stated Stanislav Grachyov, General Director of “Russian Coal”.

Alexei Rybnikov, President of “SPIMEX” JSC: “Launching the project for coal trade is a continuation of the Exchange policy on bringing strategic Russian commodities to exchange trade. We are fulfilling the objectives set in 2018-2020 National Competition Development Plan approved by the President of the Russian Federation, and detailed in the Road Map of the Government. Developing exchange trade with coal will form an open competitive coal market and representative indicators of market prices for fuel”.

2 contracts were concluded during the first trading session at SPIMEX. The first contract for sale of long-flame coal, D grade (grain-size class 0-13) (Stepnoi coal pit) was concluded FOB destination station, based on Novosibirsk West railway station; the second contract – for sale of coal, D grade (grain-size class 0-300) (Permyakovsky coal pit) was concluded FOB destination station based on “Kaliningrad Yard” railway station.

The pilot project of exchange trade with coal is developed under the frame of collaboration between the specialized Sub-Committee of FAS Exchange Committee, the Ministry of Energy of the Russian Federation, the Bank of Russia, the “Market Council” Non-Profit Partnership” Association and market participants.

Background:

St Petersburg International Mercantile Exchange (SPIMEX) is the largest commodities exchange in Russia; it organizes exchange trade on the markets of oil products, oil, natural gas, liquefied hydrocarbon gases, timber and construction materials, mineral fertilizers, as well as on the futures market. SPIMEX endeavours to achieve transparent and fair pricing for Russian commodities. SPIMEX was formed in May 2008. Its exchange license and the clearing license are published on the web-site of SPIMEX JSC.