Butadiene Methodology Consultation – Summary of responses
Following the recent announcement that ICIS would be launching a formal methodology consultation process, we have received a number of responses from key market players. To read the anonymised public responses please click on the links below.
ICIS received in total 6 responses to the Butadiene Methodology Consultation.
ICIS Initial Decision
The responses do not provide sufficient feedback for ICIS to change its current methodology for deals-based reporting of butadiene contract or spot markets in any of the geographical regions.
Four responses referred specifically to the methodology used to determine the US monthly contract price assessment. Two advocated no change to the current methodology of reporting the three net contract prices. One requested the inclusion of all four contract prices. And the fourth recommended normalising the three net contracts, by adding 5-10 cents/lb as an “adder”, to create a total assessment of four gross contracts.
After further discussion with contract participants and other interested parties, it was decided that the current methodology, although not universally accepted, remains the most reliable form of assessing fair market value. The inclusion of both net and gross contract prices in one assessment was generally felt to be unrealistic. And the proposed addition of adders would create further disagreement over the assessment of the adders, which would be unverifiable by ICIS.
On the subject of the Europe spot price assessment, one respondent requested that the report should state specifically whether the week’s range was based on deals done, or on market sentiment. This will be done from April 2014.
One respondent noted that back-up editorial cover on the Europe report could be less accurate than usual. This has been addressed through additional training.
The introduction of a Europe butadiene price alert was suggested, and also the merger of the Raffinate-1 report into the Butadiene report. These will be further investigated, with a view to any changes being made by January 2015.
One respondent asked for broader coverage of derivatives. This request has been passed to the ICIS New Product Development team.
To provide further comments or feedback on the ICIS butadiene methodology, please contact:
Barbara Ortner: firstname.lastname@example.org
Nel Weddle: email@example.com
John Dietrich: firstname.lastname@example.org
Helen Yan: email@example.com