The Hindu : Business : mjunction to launch coal price index

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Wednesday, Sep 23, 2009
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mjunction to launch coal price index

Special Correspondent

The move is expected to help Indian buyers hedge their risk against coal price volatility

KOLKATA: India will soon get its first coal spot price index, which will act as an indicator of the country’s coal market for all grades of coal. E-commerce company mjunction services is planning to launch this index paving the way for a scientific price discovery mechanism for the fossil fuel. The index service will be called MJ Composite.

Indications were that the index was likely to be calculated on the basis of the weighted average price of coal, tendered at various mines. The transaction data of the coal e-auction platforms is likely to be a base, sources said.

There are over 478 mines in the country which produce coal grades varying from A to G (depending on their ash content). This leads to multiple pricing to reflect the varieties of coal produced. Coal is produced mainly at the mines of the public sector Coal India which accounts for 80 per cent of the production and the joint venture Singareni Collieries Company based in Hyderabad.

The move is expected to help Indian buyers hedge their risk against coal price volatility through a benchmark price index. “This will be like a benchmark index like say LIBOR (London Inter-Bank Offered Rate) and it is expected to cut down the need for further negotiations on price, acting as a reference point for the spot market,” an official of CIL told The Hindu.

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