[Exclusive] Battle for Met Coal Benchmark: MCC for Paper, Platts for Physcials?

Met Coal Benchmarks: The Battle Between Precision and Simplicity

The metallurgical coal market is watching two major index providers—Platts and McCloskey (MCC)—diverge in philosophy. At the heart of the debate: should benchmarks mirror the complex physical trade, or should they simplify into a single global reference to drive liquidity?

Platts has long anchored its pricing to a single PLV FOB Australia index, but expanded with brand relativity tables and, more recently, a PMV CFR India index. The goal is precision: capture how real cargoes are traded, reflecting the premiums and discounts mills pay for different brands, CSR levels, and destinations. This caters directly to miners, mills, and traders who negotiate physical tonnes every day.

MCC, in contrast, initially embraced granularity by creating both PLV and PMV indices and widening relativity frameworks. But now it proposes a radical rollback—collapsing everything into a single FOB Australia premium hard coking coal marker, scrapping MCC2 and China CFR references. Their pitch is that coal is fungible and fragmented indices dilute liquidity. By normalising into one benchmark, MCC aims to create a “Brent-style” clearing price and concentrate flows in the paper market.

Our view: MCC’s shift may appeal to financial players hungry for liquidity, but it risks irrelevance in physical negotiations where brand and quality matter most. Platts remains truer to the market’s complexity. In the future, we may see a dual system emerge: MCC for paper, Platts for physicals.

Implications of a Split Market:

If MCC becomes the go-to benchmark for paper markets while Platts remains the trusted reference for physical cargoes, the industry faces a dual-benchmark world.

Hedging basis risk rises: Cargoes priced on Platts but hedged with MCC paper will introduce spreads that widen or narrow unpredictably, similar to the Brent–WTI dynamic in oil. Traders will need to manage this basis risk actively, and some may even trade the MCC–Platts spread as a strategy.

User groups diverge: Financial funds and macro players will gravitate toward MCC for its simplicity, while mills, miners, and traders will stick with Platts for accuracy in brand and regional pricing.

Paper–physical disconnects become common: MCC may show a flat global index while Platts records surging premiums for a specific brand into India. Arbitragers can profit, but the paper curve risks losing predictive power for real-world cargoes.

Negotiating power shifts: The choice of benchmark itself could become a bargaining chip in contracts, adding another layer of tension between buyers and sellers.

Bottom line: MCC’s simplification may help build liquidity in financial markets, while Platts will likely remain indispensable for physical trades. Is this what the market really needs?