when Noble forecast a first-quarter loss of $130m—blamed largely on ill-judged coal trades—and warned that it might not return to profitability until 2019. Can you better put in context the warning that it might not return to profitability until… “Hedging loss” are rather because of a mismatch between the level of profits booked on these contracts and their underlying expected cash-flows.

1. 1
The negative significance of Noble (來寶
集團) Mark-to-Markets Gains on
Derivatives and Commodity Contracts
Noble Group Ltd. Credit, Financials, Hedging, Physical Trading noble, mark-to-market, coal, profitability,
Cargill, Rio Tinto, BHP, Vale, Anglo American
The only reproach that one could do to Iceberg Research is that he didn’t communicate
well enough his message so people understand the negative significance of this $3.4B
MtM or on what Noble Group (來寶集團) underpins its financial substance: a skeleton.
What is MtM and how a $3.4B MtM would translate into coal hedges)…

2. 2
Mark-to-market (M-t-M)
To mark-to-market is to calculate the value of a financial instrument (or portfolio of
such instruments) at current market rates or prices of the underlying.
http://www.risk.net/definition/mark-market
Example for illustrative purpose:
On 1 Jan 2017: Noble buys 2,000,000 MT for June 2019 delivery at $59/mt. It turns
immediatly in the derivatives market and sells the equivalent of 2,000,000 MT of paper
contracts. This is the Coal API2 Argus futures contracts.
This is the Coal API2 Argus Futures Contracts:

3. 3
Timeline
1 Jan 2017: Noble has a +MtM of 0 (Contract price is $59 and the Argus Futures is at
$59)
1 Feb 2017: The Argus Coal API2 futures is at $64,25. The +MtM on the coal contract is
+$10,5M
20 March 2017: The Argus API2 Futures dropped to $59,25/MT The +MtM on the coal
contract is +$500K
1 May 2017: The Argus API2 settled at 62,55 and the +MtM on the coal contract is now
+$7,1M
–
Noble Group MtM on Coal contract:

4. 4
–
-At any given time, the 2,000,000 MT of Coal produces a MtM gains between $500K
and $11.5 millions.

5. 5
Capezize Ship
when Noble forecast a first-quarter loss of $130m—blamed largely on ill-judged coal
trades—and warned that it might not return to profitability until 2019.
Can you better put in context the warning that it might not return to profitability until…
“Hedging loss” are rather because of a mismatch between the level of profits booked
on these contracts and their underlying expected cash-flows.
In order to produce $3.4B of MtM gains, Noble would have to buy not 2,000,000 MT of
coal , as in this example, but book nearly 958 million metric tons – the equivalent of
6937 Capezize cargoes Richards Bay-Qingdao, China or 5 voyages per week for the
next 13 years…
This represents a considerable tonnage even for the largest firms of the industry (Cargill,
Rio Tinto, BHP, Vale, Anglo American) all put together and more than 1.21 year of
world coal production*
the Noble Files 高贵组文件 研究
**According to BP statistical review of word energy 2016, the world coal production was
786.1 million tonnes (2015)…