FIS Brokers First Coking Coal Swap With Credit Suisse

Commodities broker Freight Investor Services said Tuesday it has brokered its first coking coal swap trade, with Credit Suisse as the counterparty, completing the move of steelmaking materials towards derivatives trading.

The deal, concluded Tuesday, was for 9,000 metric tons of Platts premium low-volume coking coal for the first quarter 2012, priced at $245/ton and cleared through the CME Group.

FIS broker Arne Petter Kolderup brokered the swap.

John Banaszkiewicz, managing director of Freight Investor Services, said the deal marks a "new frontier for coal producers, steel mills and traders," allowing them to hedge their risk from raw materials right through to finished products.

"Coking coal is the final product to complete the derivative ingredients of the paper steel mill, along with contracts for iron ore, freight and steel swaps," he said.

Seaborne coking coal trade volume has increased steadily over the last 20 years, reaching this year an estimated 270 million tons worth around $80 billion.

Despite global output growing by almost 50% since 1991, to 891 million tons in 2010, quality coking coal has become harder to source, driving increased price volatility, FIS said. Spot prices leapt 75% from below $200/ton to just under $350/ton at the start of 2011, and then fell back to $270/ton in the summer.

FIS and Credit Suisse are already both strong supporters of iron ore swaps. In August, Credit Suisse completed the first ever cleared coking coal swap transaction through the CME over-the-counter cleared contract.

-By Andrea Hotter, Dow Jones Newswires; +44 (0)20 7842 9413; andrea.hotter@dowjones.com

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