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Coal Trading & Markets

Coal : Trading | Market | Production | Price | Further Reading Coal is a type of combustible fossil fuel that is one of the primary sources of electricity across the world, along with oil. Coal is blackish rock composed of carbon, hydrogen and oxygen that occurs naturally underground. It is a by-product of the fossilisation of decayed animal and plant remains that have been condensed by approximately 300 millions of years of heat and pressure. Coal provides an estimated 40% of the total worldwide supply of power, whether as a combustible solid or as when it is processed into a liquid, such as diesel and petroleum.

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Coal Trading

As a commodity, the primary commodity exchange for coal trading is the New York Mercantile Exchange (NYMEX), where it is traded under the ticker symbol of QL, which is for a futures contract of high-grade Central Appalachian Coal. A typical NYMEX coal futures contract is the equivalent of 1550 tonnes of coal. Futures for coal that is mined in other locations are also available, but Central Appalachian Coal is considered the benchmark by which the others are measured. Coal is also traded on the European Energy Exchange (EEX), the United States/Canada/United Kingdom based Intercontinental Exchange (ICE) and India’s Multi Commodity Exchange (MCX), amongst other exchanges. The fact that coal is still one of the most popular energy commodities in use today is its most salient special feature as a source of power and a raw material. While coal trading itself is not as common as trading in other materials, with most coal being consumed domestically in the country in which it is produced, developing countries with increased flows of capital are providing a stable demand for coal for use as a power source. This does allow for coal prices to rise on the market, and for coal trading to act as a lucrative investment for traders. Coal is also available in finite amounts, so it is conceivable that as supplies dwindle at some future time, then demand will far outstrip supply, increasing the coal price and the price of coal futures.

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Coal Market

Coal is primarily used as a fuel, and so this tends to be the market where it is required most often. As well as being used as fuel to be combusted in its solid form, it can also be converted to liquid petroleum and diesel to act as fuel for vehicles ranging from small motorbikes to huge aeroplanes. Coal is also used in the industrial sector as the fuel to power furnaces which are a necessary and integral part of the iron and steel industries.

Coal Production

In terms of production, the United States of America is believed to have the largest available coal reserves, at around 250 billion tonnes, with Russia and China in possession of roughly half that amount each. Despite this however, it is the coal industry of China that is the most prolific producer of coal, as well as consuming the most.

Coal Prices

The figures viewable on coal price charts in regards to the price of the coal commodity will fluctuate in accordance with several variables. The coal market price can be affected by, for example, the discovery of any new fuel source. Environmentally friendly sources of fuel are always being sought, as coal is considered to be a major pollutant, and any that are created may decrease the demand for coal significantly. Trading in coal futures may also be affected by the demand for fuel from countries that have growing economies and yet no domestic supply. Brazil is one such example, and coal market prices will be affected accordingly as time passes.

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Further Reading

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