JFX to trade coal contracts next year
JFX to trade coal contracts next year
Zakki P. Hakim, Jakarta
The Jakarta Futures Exchange (JFX) plans to start trading coal
contracts sometime in the first half of next year, according to a
senior official of the exchange.
JFX director J.W. Sudomo told reporters on Monday that the
exchange was still discussing the plan with the Indonesian Coal
Mining Association (APBI), the Indonesian Cement Association
(ASI), state power company PT PLN, and other key buyers.
He said that the realization of the plan required strong
"commitment" from both producers and buyers.
Currently, players in the local coal market use coal prices
announced by the New York Mercantile Exchange (NYMEX) as a
reference in pricing the commodity.
But Sudomo said that coal contracts trade on NYMEX was not
relatively liquid. He said that a liquid trade would be more
beneficial for both producers and buyers of the commodity.
JFX opened its operation in 1999, trading contracts of olein,
robusta coffee, crude palm oil and gold. However, currently, only
olein and gold are traded, while the other two are temporarily
suspended due to weak market response. The exchange is currently
improving the contract specification for robusta coffee and crude
palm oil to lure interest.
Presidential Decree No. 119/2001 stipulates that commodities
designated as subjects of futures contracts are coffee, palm oil,
rubber, cocoa, soybean, pepper, fish, shrimps, peanut, fuel,
natural gas, sugar, clove, plywood, pulp and paper, yarn, tin,
coal, gold, fertilizer, cement and electricity.
JFX division head of business development and promotion Andam
Dewi said, however, it would be difficult for now to trade all of
the commodities stipulated in the decree because of government
intervention in the pricing of some of the commodities.
"How could people trade the contracts if the government has
the final say in deciding commodity prices or if certain state
companies monopolize some commodities," she said.
According to Business Monitor International, national coal
production in 2004 is estimated at around 119.7 million tons, up
from 109.3 tons in 2003 and 103 million tons in 2002.
Seventy percent of Indonesia's coal production goes to the
export market.
Reports said domestic demand for coal has been increasing.