globalCOAL NEWC Index

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globalCOAL NEWC Index Methodology and Calculation
Please contact Richard Bennett should you have
any questions on this document 44 20 7758
9110 or richard.bennett_at_globalcoal.com Global
Coal Ltd is regulated by the FSA
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Presentation Contents

• Index Basic Facts
• Index Data
• Weekly Index Calculation
• Weekly Index Calculation Diagram
• Transaction Bid/Offer Weighting
• Calculating The Index Example
• Monthly Index

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Index Basic Facts

• Weekly monthly figures in US Dollars per tonne
• Weekly
• calculated each Friday at 1200 hrs London time
• based on all firm bids/offers and trades within
  that week
• Monthly
• calculated on the last Friday of each calendar
  month
• at 1200 hrs London time
• equal to arithmetic average of weekly indices
  within that month

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Index Data

• Transactions executed, firm bids / offers
  submitted to the Standard Coal System
• For delivery in the next 3 calendar months
  (current month excluded)
• Bids / offers must be posted for a minimum of 15
  continuous minutes (or traded)
• Monday to Friday between 0200 1200 London
  time
• Primary holidays (like Boxing Day, Easter, etc)
  excluded

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Weekly Index Calculation

• Based upon weighted average of
• Transaction Element tonnage-weighted average
  price of all transactions deemed to be
  Applicable Data and collected during the Data
  Week
• Bid/Offer Element arithmetic average of the
  Daily Bid/Offer Sub-Elements collected during
  the relevant Data Week
• Weekly bid / offer component weighting fixed at
  150,000 tonnes

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Based on all qualifying bids/offers FOR THAT DAY
Weekly Index Calculation
Bid/Offer Element
Transaction Element
Based on all current qualifying bids/offers FOR
THE WEEK
Absolute
Rolling
24.87
Weekly Index 24.90
(24.94150,00024.87180,000)/(150,000180,000)
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Transaction Bid / Offer Weighting
As transacted tonnage increases, the bid/offer
elements weighting in the final weekly index
decreases.
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Bid / Offer Filters

• The NUMBER of applicable bid / offer prices
  included
• on a daily basis is the lower of
• 10 and
• 20 of the number of bids or number of offers
  and
• The number of bids or offers within 4 of the
  best bid / ask
• In addition, the number of bids and offers
  included in the index must always be equal.

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Calculating The Index - Example
Assume today is Monday, April 22nd. Hence the
index calculated will exclude prices posted for
April delivery and include prices posted for May,
June and July delivery
Assume 7 bids and 9 offers submitted for May,
June and July delivery throughout the day.
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Calculating The Index - Example
Rule 2 no more that 10 bids/offers must be
included in the index
Bids 10 Offers 10
Rule 3 number of bids/offers within 4 off the
best bid/offer
Bids 7 Offers 3
Rule 4 no more that 20 of the number of
bids/offers must be included in the index
Bids 1 Offers 2
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Calculating The Index - Example
STEP 2 - take the minimum number of bids and
offers
Bids 1 Offers 2
MINIMUM
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Calculating The Index - Example
Bids 1 Offers 2
STEP 3 - take equal number of bids and offers
(Methodology Rule 1)
Bids 1 Offers 1
Resulting Bid/Offer Element Average of 25.70
and 26.10 25.90
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Monthly Index

• globalCOAL publishes a monthly index derived from
  the weekly index
• Calculated as the arithmetic average of each
  relevant weekly index
• Based upon every Friday falling within the
  calendar month