This article analyses the evolution of hard coal trade in the Asia Pacific region, known as the Pacific market, from the 1980s to the present years. It investigates the development of the trade pattern, the nature of contracts, the price setting, the supply demand and the future of trade.
Over the last two decades, the international trade in the Pacific market has achieved dramatic increases in coal commerce. This achievement is due to strong demand in Japan and North-east Asian countries and progressive coal export in Australia and Indonesia. It is likely that this market will continue to expand and become a more important market in replacing the Atlantic market.
In this market, historically, long-term supply contracts were usual and concluded between producer and consumer. Even recently, there are still annual contracts, but with a small number of deals. In contrast, spot transactions are now becoming more important. Previously, Japan had been influential in price setting by establishing ''a benchmark price'' with Australian coal suppliers. Afterward ''a reference price'' was becoming a trend. Nowadays, spot price indices, such as the Barlow Jonker, the Barlow Jonker ACR and globalCOAL, have become important to set the price.
The Pacific market growth is not without problems. The exporter countries, particularly Australia and Indonesia, have some challenges that if they are not resolved at present, it would implicate the performance of the coal trade.