Article 1
In order to ensure normal delivery business operations for Steam Coal at the Bohai Commodity Exchange (hereinafter referred to as the Exchange), and to regulate Steam Coal delivery activities of traders and associated parties, this Rules is enacted subject to the Interim Measures of Tianjin Bohai Commodity Exchange for Trading Market Supervision and Administration, Jin Zheng Fa [2009] No 32., and the Rules of Tianjin Bohai Commodity Exchange for Continuous Spot Trading Management.
Article 2
Delivery of Steam Coal shall operate in accordance with this Rules. The Exchange, traders, and associated parties shall comply with the Rules.
Article 3
The delivery method that has been adopted for Steam Coal is via cargo shipping. It follows that, according to the agreed contract, the seller shall load the Steam Coal to the buyer’s cargo ship at the designated port, and complete the transfer of ownership of the Steam Coal within the time prescribed in the contract. The buyer will then make the corresponding payment to the seller.
Article 4
The designated ports refer to the Exchange-designated delivery ports where traders shall perform the physical commodity delivery in accordance with the e-trading contract of Steam Coal.
Article 5
The Exchange practices a delivery declaration on every trading day system.
Any trader who submits a delivery declaration must be a legal entity that is registered with the Industrial and Commercial Administration Department, possesses the corresponding Steam Coal business license, and relates to the Steam Coal’s production, business operation, or consumption activities.
Article 6 Delivery Declaration and Delivery Matching
6.1 Buyers and sellers who hold e-trading contracts for Steam Coal may make a delivery declaration for Steam Coal during the delivery declaration period on each trading day: night time at 19:00 p.m. - 3:00 a.m.; morning time 09:00 a.m. – 11:30 a.m. ;afternoon time 13:30 p.m. – 16:00 p.m. via the delivery declaration system of the Exchange.
6.2 Delivery information must be provided when making a delivery declaration. The delivery information shall include the designated port, date of loading, delivery quantity, and minimum delivery quantity.
Traders who initiate a delivery declaration must clearly specify the designated delivery port. Traders shall deliver the same batch of the commodity that is referenced in the delivery declaration at the same designated delivery port.
The Ship Loading Date refers to the initial date for loading the commodities to the ship. The ship loading date must not be later than 20 calendar days (the 20th calendar day is inclusive) after the delivery declaration date.
Minimum delivery quantity refers to the agreed upon minimum quantity delivered contained in the delivery information provided by the traders. The declared delivery quantity submitted by the traders in response shall be no less than the minimum delivery quantity. For those unmatched contracts that have been declared delivered, traders can either reset the delivery information for those contracts, or cancel the delivery declaration.
6.3 The minimum delivery unit of Steam Coal is 100 lots (or 1000 tons). The delivery volume declared shall be above 1000 tons (inclusive) and be in integral multiples of 1000 tons for each trader, every time. The declared delivery quantity shall not exceed the number of positions the trader holds at one-side open interest; once the delivery declaration has been completed, the amount of the contract, which is equivalent to the declared quantity, will be frozen and become non-transferable. The declaration can be canceled during the trading period in case of failure of matching, and the frozen contracts will be allowed transfer after the cancellation of declaration.
6.4 Buyers or sellers can voluntarily choose to respond to the delivery declaration made on the Steam Coal’s delivery declaration system. If multiple traders respond to the same delivery declaration, the principle of “time priority” shall be followed in matching. Once the response has led to a successful match, neither the buyer nor the seller can cancel the declaration, and the Exchange shall automatically send both parties the results of the matching. The unmatched delivery declaration shall automatically be cancelled after the finish of the trading period on the current day.
6.5 The Delivery Department shall confirm the delivery data of the current day, and send an assessment of the results to both of the traders who have been matched successfully after the delivery declaration matching has been completed.
6.6 Both the buyer and the seller whose delivery declarations have been successfully matched shall submit a delivery commitment of twenty percent of the value of the delivered commodity (according to the settlement price on the current day), under the applicable rules of the Exchange. Once the Steam Coal delivery fee is paid, according to the principles of the E-trading contract, the Exchange shall release the margin of the corresponding E-trading contract.
6.7 The buyer shall make payment based upon the settlement price of the listed commodity on the trading day that the delivery declaration was successfully matched. The seller shall issue the VAT invoice accordingly.
Article 7 The Delivery Procedure
7.1 Buyers make the payment.
Buyers shall transfer the remaining eighty percent of the payment to the specific clearing account of the Exchange within two trading days before the ship loading date. The Exchange collects this payment on behalf of the seller.
7.2 The Exchange shall notify the seller to deliver the commodity after payment has been collected from the buyer.
7.3 Loading and unloading of the delivered commodity
7.3.1 The buyer shall be responsible for arranging the cargo ship, which shall arrive at the designated port and be prepared for loading on the agreed ship loading date.
7.3.2 The seller shall be responsible for coordinating with the designated port, arranging pre-unloading ship work, and making sure all requirements for loading and unloading the commodity are met.
7.3.3 Cargo ship entering, cargo loading/unloading, and other port-related activities must be operated in accordance with the applicable rules of the designated port.
7.4 Inspection of the Commodity
The designated Quality Inspection Institution adopts the Flowing Coal Sampling Method when taking samples during the cargo loading period. (The Designated Quality Inspection Institution will determine a method if the Flowing Coal Sampling Method is not applicable for any particular reason.) The sample shall be divided into two portions, labeled as ‘A’ and ‘B’. Portion ‘A’ shall be used for examination, and portion ‘B’ shall be sealed and kept. The quantity will be checked or verified by a designated quality inspection institution, or by a designated metrology institution (the only exception being if a consensus has been reached by the buyer and seller), and the measurement method will be Water Gauge Measurement. Both buyers and sellers shall send their representatives to supervise on site where the designated quality inspection institution or the designated metrology institution will take the samples and do the measuring. It is deemed that the seller/buyer is satisfied with the quality and quantity and will accept the result if no representative is sent to supervise on site. The designated Quality Inspection institution shall issue the Quality Inspection Report and the Quantity Measurement Report within three business days. The preparation and retention of the Steam Coal samples shall be executed in accordance with the National’s applicable rules.
7.5 The seller shall notify both the Exchange and the buyer to perform the review, and will have the Delivery Confirmation Letter filled out and submitted on the current day to the delivery department of the Exchange immediately after completion of loading the goods.
7.6 Transfer Payment and Issue VAT Invoices
7.6.1 The Exchange shall collect payment from the buyer and transfer the payment to the seller’s account based upon the Delivery Confirmation Letter, the Quality Inspection Report, and the Quantity Measurement Report.
7.6.2 The seller shall issue the VAT invoice and deliver it to the buyer within 15 days from the date payment is received. The Exchange shall release the seller’s delivery commitment after having received the Delivery Confirmation Letter, and after confirming that the buyer has received and is satisfied with the VAT invoice. It is deemed that the buyer has received and is satisfied with the VAT invoice if the Delivery Confirmation Letter is not submitted by the buyer, or if no concerns are brought to the attention of the Exchange within the prescribed period.
7.6.3 The amount of the VAT invoice shall be the actual settlement amount of the delivery commodity.
Article 8 Surplus or Shortage Clauses
8.1 The delivery amount of Steam Coal is measured by the actual loading amount of the commodity. The shortage or surplus of the physical delivery shall not exceed ±5% of the matched quantity.
8.2 If the surplus or shortage is within 5% of the matched quantity, the calculation of the settlement amount shall be based on the settlement price of the trading date on which the delivery declaration is successfully matched, and the actual physical delivery quantity.
8.3 If the quantity of the delivered goods is greater than the matched quantity by more than 5%, the price of the excess quantity shall be negotiated by the seller and the buyer. The Exchange shall be informed of the negotiation results. In case of a failure in negotiation, the buyer can refuse to accept the excess quantity.
8.4 If the quantity of the delivered goods is less than the matched quantity by more than 5%, it will be considered in default and shall be dealt with according to the applicable rules of the Exchange.
Article 9 Re-inspection
9.1 In the case of a dispute regarding the Quality Inspection Report of the Steam Coal, the buyer or the seller shall submit an application for re-inspection to the Exchange on the day when the Report is issued, and must prepay the re-inspection fee. The Quality Inspection Institution, which previously issued the Report, shall complete the re-inspection on sample ‘B’ within three business days from the date of application. The re-inspection items are restricted only to those items being applied for re-inspection. If the discrepancy between the original inspection result and the re-inspection result exceed the allowed discrepancy range, the Exchange shall refund the re-inspection fee, and the settlement payment will be based on the re-inspection result.
9.2 It shall be deemed that the buyer is satisfied with the Steam Coal if no claim for dispute declaration is submitted within the above-mentioned period of time. The Exchange shall not accept any overdue applications.
Article 10
All costs and expenses before the Steam Coal has been loaded onto the cargo ship shall be borne by the seller, and all the costs and expenses after loading shall be borne by the buyer.
Article 11 Delivery Agreement
If the buyer and seller, whose delivery declarations have successfully been matched, choose to negotiate and mutually reach a delivery agreement beyond the scope of the Exchange’s rules and regulations, they may do so but must also fax the Application for a Delivery Agreement, complete with both parties’ official seals, to the Delivery Department within 5 trading days from the matching date. Please refer to the Delivery Agreement Rules of Tianjin Bohai Commodity Exchange for the detailed delivery agreement procedures.
Article 12
The following occurrences shall be considered to make a contract default:
12.1 Where the seller fails to surrender sufficient commodity as required on the ship loading date specified in the E-trading contract;
12.2 Where the buyer fails to make full payment for the commodities as required within the prescribed time limit specified in the E-trading contract;
12.3 Where the buyer fails to arrange the cargo ship on time as required on the ship loading date specified in the E-trading contract;
12.4 Where the seller fails to arrange loading of the commodity scheduled as required on the ship loading date specified in the E-trading contract;
12.5 Where the quality indicators of the inspected Steam Coal fail to meet the requirements of the Exchange;
12.6 Where the seller fails to issue the corresponding VAT invoice within the prescribed time limit.
Article 13 Treatment of Violations
13.1 If the surplus or shortage of the actual delivery quantity exceeds the allowed range, or the buyer fails to make full payment for the commodities, then the default party shall pay 20% of the defaulted contracts’ value as penalty to the observant party.
Formulas used to calculate the amount of contracts: value of contract = amount of contract × trading unit × settlement price, whereby,
Amount of seller-default contracts = quantity of commodities which seller is supposed to deliver - quantity of commodities already delivered by seller.
Amount of buyer-default contracts = (payment that buyer is supposed to make – payment that buyer already made) /（1-20%）/ settlement price / trading unit
13.2 If the buyer fails to arrange the cargo ship on time, or the seller fails to arrange the loading of commodities as scheduled on the ship loading date specified in the E-trading contract, both parties may negotiate whether they want to continue with the delivery process. If they agree to continue the delivery process, the default party shall pay daily interest of 1‰ of the contract value of the commodities to be delivered as compensation for the deferred delivery to the observant party, in addition to various port-related fines or the demurrage charges if there are any. If they do not agree to continue the delivery process, the Exchange will remit the default party’s delivery commitment to the observant party, and terminate the process of delivery.
13.3 If the Quality Inspection Report shows that the quality indicators of the Steam Coal for delivery fail to meet the quality standards specified in the contract, then both parties may first negotiate on whether they want to continue with the delivery process, and also for matters of compensation. The negotiation must be finished within one trading day after the Quality Inspection Report is released. In case of failure to negotiate, the seller shall pay 20% of the defaulted contracts’ value as penalty to the buyer. The unqualified commodities shall be returned to the seller, and the Exchange shall refund the corresponding payment to the buyer.
13.4 If the seller fails to issue the corresponding VAT invoice within the prescribed time limit, the seller shall pay 20% of the defaulted contracts’ value as a penalty, unless both parties agree to defer the delivery of the invoice.
13.5 In the occurrence of both seller and buyer default, the Exchange shall terminate the delivery process and charge 5% of the defaulted contract value as penalty to both parties as risk reserves for the Exchange.
Article 14
In the case of default, the Exchange shall notice both parties via telephone, facsimile, email, or in the trader’s presence, and announce the default in an appropriate way on the day the default occurs.
Article 15
Delivery may be postponed accordingly in the occurrence of wars, earthquakes, floods, fire, snow storm, or other unforeseen circumstances.
Article 16
If one party’s loss is incurred due to another party’s negligence during the delivery process, both parties shall negotiate a settlement. If they fail to reach a settlement, the Exchange shall arbitrate between them. If arbitration fails to produce a determination, the involved parties may submit the matter to the Tianjin Arbitration Committee for arbitration.
Article 17
The Exchange reserves the right to interpret the said Delivery Rules.
Article 18
Please refer to the Measures for Registered Warehouse Receipts Management, the Detailed Delivery Rules, or other applicable rules for matters not mentioned herein.
Article 19
This Regulation shall become effective as of the date of promulgation.
Tianjin Bohai Commodity Exchange Ltd.
2010-10-08
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