Broker ICAP launches coal derivatives trading desk in Singapore

International brokerage firm ICAP has launched a new coking coal trading desk in Singapore, the company said on Thursday August 21.

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A deal between a European bank and a Singapore-based trading company, cleared via the Chicago Mercantile Exchange (CME), ushered in the new desk, which was opened on August 6.

As the number of market participants grows, the company expects a significant increase in volumes over the next few months.

“The CME-cleared coking coal contract adds much-needed transparency for participants in the steel complex,” George Dranganoudis, md of ICAP Energy Asia Pacific, said.

Derivatives are being used increasingly to hedge volatility in iron ore and coking coal prices, as physical traders of the two commodities are more inclined to use spot-based contracts.

This drives the need for greater price-risk management, ICAP said.