Credit Suisse trades first coking coal swap

Credit Suisse completed the first ever cleared coking coal swap transaction yesterday, in a development that should enable steel mills to hedge their exposure to their entire floating costs.

The closing of the transaction early yesterday morning was the culmination of two-and-a-half years of work to identify appropriate reference indices and sufficient liquidity, Kristian Thunes, Credit Suisse’s global head of freight and iron ore, told FinanceAsia. It marks one step closer to “eventually creating a proxy contract for steel by combining iron ore and coking coal contracts”, he said.

The significance should be especially acute in Asia. Australia is the biggest exporter of coking coal, while...