Coal derivatives market expected to boom

[SINGAPORE] The coal industry's ongoing switch from fixed to floating prices in contracts is fuelling expectations of an explosion in the nascent thermal-coal derivatives market.

And Singapore, the base for many Asian coal traders, looks set to be the battleground for exchanges to gain market share.

When prices headed up in the few years after 2008, miners saw little benefit in hedging. But now, a bearish outlook for coal has boosted interest in hedging as coal producers, reluctant to fix long-term contracts at current price levels, are starting to use shorter-term contracts.