Course Content

DAY 1

SESSION I

Introduction and the physical coal market

• Coal varieties and qualities

• Main steam coal producers, importers and exporters

• Steam coal physical flows and evolution

SESSION II

The steam coal derivatives market

• Main products traded: history, trading volumes

• Definition and methodology of main indices and futures

• Market structure: principals, brokers, exchanges

• New products recently launched

SESSION Ill

Coal derivatives trading examples

• Practical usage of derivatives for suppliers, end users, traders

• Hedging and arbitrage

• Trading strategies - Group Based Activity

DAY 2

SESSION I

Clearing and the coal market

• The credit crisis and the benefits of clearing for the coal market

• Cleared coal volume trends

• The clearing process and its participants: exchange, clearing house, clearing members

• How does an ICE cleared transaction differ from an OTC trade?

• Cash flow illustration

• Potential pitfalls to avoid

SESSION II

Forward curve and price forecast

• Difference between forward curve and price forecast

• The different shapes of forward curve: contango vs backwardation

• Historical coal forward curves and links with the physical market

• Trading the forward curve: Group Based Activity

SESSION III

Introduction to financial options in the coal market

• Status of the option market: historical volumes, types of options

• Example of call and put options

• Live demonstration of the Black Scholes model

• Application to the physical market

SESSION IV

Introduction to other commodities directly relevant to coal trading

• The physical dry freight market: vessel size, and pricing

• Main dry commodity flows: iron ore, coking coal, grains

• The financial freight market: indices and market structure (principals, brokers, exchanges).

• Emissions certificates, dark-spreads and spark-spread