The volume of thermal coal traded and cleared on the ICE Futures platform reached a 2017 high in March, gaining 20.9% month on month to reach 165.26 million mt, data from energy exchange ICE Futures Europe and electronic trading platform globalCOAL showed late Tuesday.
Options had lost some market share, however, as March's total cleared derivative volume comprised of just 17%, or 27.54 million mt, of options; the lowest figure for 2017 so far. The total had fallen 37%% from February and sustained one of the largest losses in year-on-year comparisons for the year so far at 64.39% below March 2016, according to S&P Global Platts calculations.
"We're really seeing the retreat from the market of the big natural buyers and funds," one London-based trader noted of the trend, adding that last year had seen an influx of options trading owing the position of one large producer-trader who had written a significant number of options during the first half of 2016.
Although posting a reasonable gain on the month, volumes remained 20.6% below levels seen in March 2016, continuing the steady downtrend that has seen liquidity in the thermal coal market shrinking since the start of the year. The amount of ICE Rotterdam Coal Futures traded and cleared during March posted a 31% month-on-month increase at 125.39 million mt, although this remained 22% lower than the same month in 2016. Of the volume, 20%, or 25.44 million mt, was traded as options, which was 3% lower on the month and 61% down year on year.
According to Platts data, Rotterdam prompt-month April derivatives values had been reasonably volatile over the month, moving within a $3.75 range to peak at $75.95/mt before falling to lows of $69.20/mt. Prices dropped $3.55 from where they began the month to close at $72.55/mt on March 31.
ICE Richards Bay Futures volumes posted a 138% month on month increase to reach 6.53 million mt, although this was coming from a low base as volumes had hit a 16-month low of 2.75 million mt in February. March's total volume remained 44% below the same month in 2016, marking the fifth consecutive month of reductions, with no options traded.
Volumes of globalCOAL Newcastle Coal Futures traded and cleared during March fell 13% month on month to 33.34 million mt, which was down 5% on the year. Options comprised just 6% of the total Newcastle contracts at 2.1 million mt, an 88% reduction on the month, and a 79% fall on the year, despite Newcastle prompt-month paper prices moving within a $7.50 range over the month.
Prompt month values gained $1.45/mt from March 1 to $83.95/mt at the end of the month.
"The high volatility means options traders are not so keen to sell at the moment," one trader noted of the lower activity. "We might see more action when the volatility falls a bit."
