London, 20 September 2011

Freight Investor Services, one of the world’s leading brokers of freight and commodity swaps, has announced that it has brokered its first coking coal swap trade. The deal, concluded today, was for 9,000 tonnes of Platts Premium Low Vol coking coal for the Q1 2012 period, priced at $245 per tonne, with clearing at CME. FIS broker Arne Petter Kolderup brokered the swap, which involved Credit Suisse as a counterparty.

John Banaszkiewicz, MD of Freight Investor Services, said: “This is an exciting development which really opens the door onto a new frontier for coal producers, steel mills and traders. Coking coal is the final product to complete the derivative ingredients of the paper steel mill, along with contracts for iron ore, freight and steel swaps. Coking coal, like other commodities, has moved to a spot market and prices need to be carefully managed. This is a tool that works for producers, traders and consumers who can now hedge from start to finish, from raw materials to finished products.”

Seaborne coking coal trade volume has increased steadily over the last 20 years to an estimated 270m tonnes – worth a whopping $80bn – in 2011. Despite global output growing by almost 50% since 1991 to 891mt in 2010, quality coking coal has become harder to source, driving increased price volatility. Spot prices have moved over the last year from below $200 per tonne to just under $350 at the start of 2011 and to prices this summer of around $270 per tonne.

Freight Investor Services has been an early advocate of the ‘virtual steel mill’ concept, originating new contracts covering Turkish scrap exports, North and South Europe HRC, Chinese HRC and Rebar, in addition to covering the CME US HRC contract. It is already one of the leading brokers of iron ore swaps, helping to promote liquidity as the market moves away from long term contracts to more flexible index pricing.

Credit Suisse has a history of pioneering new commodity derivatives products. In August, the Bank completed the first ever cleared coking coal swap transaction via the CME OTC cleared contract. Credit Suisse was also involved with the first iron ore swaps in 2008 and completed the first iron ore swap contract with a Japanese counterparty in June 2010.

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