What is CFR Pakistan coal assessment?
Platts is publishing the first ever CFR Pakistan thermal coal price assessment, a daily 30-60 day forward price for seaborne thermal coal exported out of various origins typically shipped to Pakistan.
CFR Pakistan reflects the value of 5,750 kcal/kg NAR coal with a typical sulfur content of 1%, delivered on a Supramax vessel to the basis port of Qasim in Pakistan in the forward 30-60 days. This price provides thermal coal producers, power producers, cement manufacturers, coal traders and ship brokers with an independent, transparent source of open-marker spot prices for mid to higher-grade thermal coal shipped to the South Asia region. CFR Pakistan is available in these Platts services: Platts Coal Trader International and fixed pages GC0410 and GC0425. CFR Pakistan too reinforces the concept further by zooming into the South Asian market with growing potential for thermal coal demand on a delivered basis. Pakistan is expected to emerge as a significant consumer of thermal coal in the foreseeable future. The country’s domestic production in the region of Baluchistan currently caters for only 5% of national consumption. Coal is expected to account for a significant part of their energy mix.
Evolution of Pakistan coal market
We began assessing CFR Pakistan on June 1, 2020, the first-ever price marker to reflect the delivered price of coal to Pakistan, while anticipating changes in supply and trade-flows.
The physical coal market in Asia is emerging and Platts recognizes this opportunity to launch a price assessment reflective of the market. Pakistan is currently importing around 11 million mt of thermal coal per year for its power utilities and end-users, in the fields for distribution and usage in the power.
In the next 10 years, thermal coal traders largely adopted an optimistic stance that Pakistan will import up to 25 million mt of thermal coal per year with coal-fired power plants in pipeline. The key demand determinant lies within the realization of Pakistan coal-fired power plant projects which are almost 100% dependent on imported coal.
S&P Global Platts Analytics has also started to focus on this market with expectations for coal imports to take a jump in the next few years.
How do we assess CFR Pakistan coal price?
Our team of experienced coal market reporters surveys a broad pool of active market participants including but not limited to producers, consumers, traders and brokers on a daily basis.
Platts places great value on its ability to discover settled physical tonnage deals, as well as bids and offers for spot cargoes, which constitute the best indication of the true market value for a given coal. In the absence of confirmed trades, bids, or offers, assessments take into account buying, selling, tradeable indications that meet Platts methodology guidelines. Bids and offers must increase or decrease in reasonable increments to ensure that every price level has been tested, and yield an assessment that reflects transactable value. Our CFR Pakistan 5,750 kcal/kg NAR daily assessment reflects the tradable, repeatable spot market price of this increasingly important grade of coal at 1700 UK time precisely.
We publish bids, offers, expressions of interest to trade, and confirmed trades during our Market on Close process every day. The information is summarized in our daily market commentary in Platts Coal Trader International.
Each day in Platts Coal Trader International, the CFR Pakistan assessment is published directly beneath the NEAT Coal Index 5,750 kcal/kg NAR assessment.
SPECIFICATION: CFR Pakistan reflects thermal coal cargoes with a calorific value of 5,750 kcal/kg NAR with 1% sulfur, 17% ash and 12% moisture.
LOCATION: CFR Pakistan reflects deliveries to Pakistan ports on a CFR basis, with Qasim as the basis port.
ASSESSMENT PERIOD: CFR Pakistan reflects cargoes delivering 30-60 days forward from the date of publication. For example, on June 1st, the assessment would reflect cargoes delivered from July 1st to July 31st.
VOLUME: CFR Pakistan reflects cargoes delivered on a standard Supramax vessel.
Why is CFR Pakistan coal market important?
With thermal coal imports expected to increase more than double in the next 10 years, Pakistan has attracted attention as an exciting market for investors and traders.
Procurement is mostly done on a spot basis (>80%) due to credibility and defaults issues, with some state-owned power plants buying on long term contracts.
In the country’s generation mix, the coal share overtook gas in November 2019 and has surpass them for the past 5 months. Platts Analytics is starting to focus this market as they also expect coal imports to jump in the next few years.
Given the coal demand potential in this market, CFR Pakistan is more than ever relevant for market participants to monitor the price movement of various generation fuel types on a delivered basis.
CFR Pakistan on a delivered basis is also becoming more relevant to the South Asian region as the market demands for greater transparency in the spot market as each country’s imports constitutes a share in the global coal environment.
Thermal coal continued to be an important base-load power supply because it involves the lowest geopolitical risk and has the competitive price per unit of heat energy among generating fuels.
While thermal coal has been associated with high carbon emissions, developing countries still consider coal as an important fuel in its energy mix because of the low geopolitical risk and its competitive price among various fuel types.
