Platts Premium Low Vol, or PLV, is the flagship benchmark assessment of Platts' 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 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.
Platts Premium Low Vol reflects the repeatable spot transactable price of premium low-volatile hard coking coal, normalized to 71% coke strength after reaction, 21.5% volatile matter, 9.3% ash, 9.7% moisture, 0.5% sulfur, 0.045% phosphorus and 500 ddpm maximum fluidity.
The assessment is formed based on actual spot transactions, as well as bid and offer information collected from active market participants.
A core strength of Platts' methodology is that it enables PLV to always reflect the prevailing Asia-Pacific clearing market price, thanks to netback and netforward calculations from the prevailing hub of spot trading activity.
This hub has been the Chinese import marker for the past two to three years, when oversupply has forced global suppliers to compete on a CFR China basis.
However in the past, under tighter market conditions, buyers have been forced to compete on an FOB Australia basis for material, a situations which could reemerge in the future depending on the balance of supply and demand.
Another important contributing factor to the success and reputation of PLV is the depth of transactional data used in its formation. Platts has observed about 335 premium HCC spot transactions in 2014 amounting to about 27 million mt traded.
For Asia-Pacific metallurgical coal as a whole, Platts captured 1,049 spot transactions in 2014, including on average 85-90% of the largest Australia-China trade flow as reported by the Australian Bureau of Statistics.
This data helps Platts to track the relative value of coking coal brands in the spot physical market, and to use these relativities to calibrate the adjustments needed from PLV standard specifications in the assessment process.
These relativities are published in Platts newsletters on the last working day of every month.
Platts has also been able to utilize its library of transaction data to attain cutting-edge understanding how the quality of coking coals affects price.
As part of this, Platts has designed a proprietary "value-in-use" model, which is used to further validate and give a theoretical grounding to observed brand relativities.
Platts coking coal assessments reflect spot market value as of 5.30 pm in Singapore.
Platts publishes bids, offers, expressions of interest to trade, and confirmed trades during our Market on Close assessment process every day.
The information is summarized in our daily newsletters and is published in full on our real-time information service, Platts Metals Alert.
Platts provides on a daily basis the most comprehensive suite of metallurgical coal assessments available anywhere, catering especially to the five to ten major categories of coal qualities traded in the global seaborne market.
In Asia-Pacific, as well as assessing the flagship PLV index, Platts publishes daily price references for second-tier hard coking coal, PCI coals and semi-soft coking coals.
While PLV is emerging as a benchmark for all coking coal, these other assessments are also regularly used in spot and term contracts.
In the Atlantic, Platts publishes the region's most closely-followed daily low-vol hard coking coal, high-vol A and high-vol B prices, reflecting trade flows from the US to Europe and Brazil.
In 2015, Platts will aim to go even further in providing relevant, transparent, granular and comprehensive metallurgical coal and coke pricing information, by publishing a wide selection of coking coal brand relativities on a daily basis.
The Platts Premium Low Vol Coking Coal Price Assessments are available in the following Platts services:
Steel Markets North America Conference, 13th Annual
Platts Global Metals Awards, 5th Annual
How the Aluminum Market Works Training and Hedging Workshop: Nashville
Price Assessment Methodology Explained Training
Training & Events – Metals