China's National Coal Trading Center has officially launched a new trading product for non-standardized pre-sale or pre-purchase orders backed by physical commodities including coal and coal-related products, following regulatory approval from the competent financial supervision authority, with business testing and trial operations now underway.

Order trading is an innovative model where transferable pre-sale or pre-purchase orders serve as the underlying asset, matched through exchange-based transactions, transferable thereafter, and settled via physical delivery upon maturity. The core feature is that the trading object is an order contract rather than immediate spot goods, characterized by price locking, customization and transferability.

The center said the key value of order trading lies in filling the gap between futures and spot markets, enabling physical enterprises to lock in prices in advance, adjust flexibly and match supply with demand precisely without relying on futures instruments.

The National Coal Trading Center said order trading can address four long-standing supply-demand mismatches in the coal industry chain.

Through order pre-purchase, buyers can agree in advance on key quality indicators such as coal calorific value and sulfur content, overcoming the limitations of uniformly allocated coal that struggles to suit specific production processes.

Buyers and sellers can also lock in production and sales plans for months or longer cycles, stabilizing production and procurement rhythms at annual and quarterly levels, smoothing seasonal inventory fluctuations and hedging against sharp coal price swings.

In addition, fragmented transport demand can be consolidated through orders, aggregating small shipments into large-scale capacity requests, significantly improving the efficiency of trunk rail and shipping capacity while reducing overall logistics costs across the chain.

More critically, supply chains and capital flows built on genuine order backgrounds can support targeted credit and efficient turnover, easing procurement funding pressure for small and medium-sized coal producers, traders and downstream users, and improving capital efficiency across the coal industry chain.

The trading process consists of three stages. In the issuance and matching stage, sellers list or auction customized pre-purchase or pre-sale orders, buyers apply independently, and the system matches transactions, with orders transferable after execution. In the contract signing stage, legally binding electronic contracts are automatically generated, clarifying the rights and obligations of both parties. In the physical delivery stage, commodity delivery and payment settlement are completed upon contract maturity, achieving a closed loop from order to spot.

This fully digitalized and rules-based operational model significantly reduces transaction communication costs and performance risks for enterprises, according to the center.