Market Basics » Coal


Coal is a combustible black or brownish-black sedimentary rock normally occurring in rock strata in layers or veins called coal beds or coal seams. The harder forms, such as anthracite coal, can be regarded as metamorphic rock because of later exposure to elevated temperature and pressure. Coal is composed primarily of carbon along with variable quantities of other elements, chiefly sulfur, hydrogen, oxygen and nitrogen.

Trading unit

In the United States the trading unit is short tons. Elsewhere it is metric tonnes.

Most quotes are denominated in U.S. dollars and cents.


Mt (million tons or tonnes)

Units for delivery

New York Mercantile Exchange (NYMEX) - 1,550 short tons per contract.

Intercontinental Exchange (ICE) - 5,000 metric tonnes per contract.

Pricing mechanisms

Spot Market, Futures Contracts and Over-the-Counter.

Pricing Impacts

The most important properties of coke are ash and sulfur content, which are linearly dependent on the coal used for production. Coke with less ash and sulfur content is highly priced on the market. Other important characteristics of coke include M10, M25, and M40 test crush indexes as they convey the strength of coke during transportation into the blast furnaces (BF); depending on BF size, there are certain requirements for coke size before entering the blast furnace, finely crushed coke pieces must not be allowed into the BF because gas dynamics would be impeded inside. Coke Strength After Reaction or CSR index is another important characteristics of coke as it represents coke's ability to withstand the violent conditions inside the blast furnace before turning into fine particles.

Avenues of trade

In North America, a Central Appalachian coal futures contract is currently traded on the New York Mercantile Exchange (trading symbol QL). The trading unit is 1,550 short tons per contract, and is quoted in U.S. dollars and cents per ton.

In addition to the NYMEX contract, the IntercontinentalExchange (ICE) has European (Rotterdam) and South African (Richards Bay) coal futures available for trading. The trading unit for these contracts is 5,000 metric tonnes, and are also quoted in U.S. dollars and cents per ton.


Coal is mined commercially in over 50 countries. Over 7,000 Mt/yr of hard coal is currently produced.

Coal production has grown fastest in Asia, while Europe has declined. The top coal mining nations are China, USA, India, Australia, South Africa, Russia, Indonesia, Poland, Kazakhstan and Colombia.

Most coal production is used in the country of origin, with around 16% of hard coal production being exported.


Metallurgical (coking) Coal

Coke is a solid carbonaceous residue derived from low-ash, low-sulfur bituminous coal from which the volatile constituents are driven off by baking in an oven without oxygen at temperatures as high as 1,000 ¬8C (1,832 ¬8F) so that the fixed carbon and residual ash are fused together. Metallurgic coke is used as a fuel and as a reducing agent in smelting iron ore in a blast furnace. Coke from coal is grey, hard, and porous and has a heating value of 24.8 million Btu/ton (29.6 MJ/kg).

Thermal (steaming) Coal

Coal is primarily used as a solid fuel to produce electricity and heat through combustion. When coal is used for electricity generation, it is usually pulverized and then burned in a furnace with a boiler. The furnace heat converts boiler water to steam, which is then used to spin turbines which turn generators and create electricity. The thermodynamic efficiency of this process has been improved over time.Approximately 40% of the world electricity production uses coal.

Types of coal

Coal classification is based on the amount of carbon, or 'volatiles', in the coal and how it responds to increasing heat and pressure beneath the earth's surface. However, the exact classification varies between countries.

Coal is generally classified into four categories:

  • Lignite
  • Subbituminous
  • Bituminous
  • Anthracite

The Germans apply a more exacting classification arrangement:

Name % Volatiles
Braunkohle (Lignite) 45-65
Flammkohle (Flame coal) 40-45
Gasflammkohle (Gas flame coal) 35-40
Gaskohle (Gas coal) 28-35
Fettkohle (Fat coal) 19-28
Esskohle (Forge coal) 14-19
Magerkohle (Non baking coal) 10-14
Anthrazit (Anthracite) 07-12

Extraction, Processing, Refining & Supply Chain

Coal is mined either in open pit mines (on the surface of the earth) or in underground mines.

Once coal seams are found, mining teams work to estimate the quantity, quality and depth of coal in the area. In open pit mines, the topsoil is first carefully removed and stored where it can be used to restore previously mined areas into thriving ecosystems.

Blasting is then used to break through rocks and other overburden. The rubble and overburden is removed from the mine by large machines called draglines or shovels.

Additional blasting is used to free the coal, which is then loaded onto haul trucks and transported to coal handling facilities where it is sized, blended and loaded into trains according to customer specifications. Finally, the coal is taken to power plants, mills or sold in international trade.

Once an area has been mined, the land is reclaimed and restored using topsoil taken from the original site, or from a nearby mine.

Clean coal technology

For coal to remain a valuable long-term energy source, coal producers and users need to minimise the impact of burning coal and reduce the amount of carbon dioxide emissions from power plants.

Technology breakthroughs are required to find new ways of using coal that will supplement existing efficiency improvements. These initiatives range from improving the performance of existing boilers, to promoting the adoption of more efficient, advanced boiler designs, to coal gasification and, eventually, to carbon capture and sequestration.

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