Background
ICIS is implementing a process of rolling consultation on all of its pricing methodologies. Consultation paper GMC03/19 is part of this formal process and covers all of the ICIS primary price points included in the styrene weekly publications. Styrene-Methodology-Consultation-2019
The consultation asked general questions about the suitability of the ICIS pricing methodology.
Summary
ICIS received 12 responses, of which 11 were written, one verbal. This summary takes into account all responses.
Regarding the Europe contract reference price, six respondents wanted an arithmetic average of all bilateral settlements, rather than the mid-point, so that every reported agreement counts. Two companies supported giving priority to “2+2” confirmation, together with an arithmetic average. In addition, five respondents asked for further details of the process including: criteria to participate, date and duration of negotiations, fall-back arrangements, communication of settlement to ICIS, exclusion from process.
Under criteria to participate: tonnage of annual net buying or selling position, with minimum volumes. Two respondents wanted these criteria defined in detail.
Under date and duration of negotiations: two respondents wanted a calendar of dates a year in advance.
Under communication of settlement to ICIS: one respondent detailed topics which negotiating parties should not discuss with each other, and noted that only the final settlement should be communicated to ICIS.
One respondent wanted the ICIS contract reference price assessment to require a minimum participation of three parties, and for ICIS not to disclose the identity of the participants.
Regarding assessment of the spot market, one respondent asked for an explanation of when the assessments in the ICIS Daily Aromatics report change from one month to the next month.
Another respondent noted that the reports should aim to get more reported spot deals, and that in weeks of too few reported deals, the assessment should rather be based on bids and offers.
Regarding the FCA Rdam monthly contract price, one respondent wanted this removed because of the lack of confirmation, although another respondent wanted it continued.
Regarding the ICIS news “Noon Snapshot” and “Evening Snapshot”, one respondent asked for bid-offer ranges instead of the current mid-point.
Regarding Price Alerts, one respondent requested more alerts during the day.
Regarding Asia, one respondent asked for a spot assessment for the Indian market, along with market commentary.
One respondent requested details of ICIS’ plans for the new INCOterms in 2020.
ICIS Decision
For the monthly contract reference price assessment, ICIS will move to an arithmetic average of all bilateral settlements, rather than the mid-point, so that every reported agreement counts. This means that multiple settlements at the same price will be included separately in the calculation.
This will take effect from the June 2019 contract price.
In addition, further details of the process will be added to the methodology document: criteria to participate (including minimum volumes), date and duration of negotiations, fall-back arrangements, communication of settlement to ICIS, exclusion from process, minimum participation.
Regarding the calendar of dates a year in advance, ICIS will survey contract participants regarding the time of day for the deadline.
For assessment of the spot market, ICIS will add to the methodology document an explanation of when the month changes in the ICIS Daily Aromatics report.
ICIS will also survey market participants to see if there is support for basing assessments on bids and offers when trading is thin.
The FCA Rdam monthly contract price will be removed due to lack of confirmation.
In addition to the mid-points in the ICIS news Noon and Evening Snapshots, ICIS will continue to give bid-offer ranges throughout the day via Market Alerts.
For India coverage, ICIS will continue to include market information in the report commentary when relevant. For the moment, the bulk of import trade is on a contractual basis and derived from the benchmark CFR China number. However, we will continue to monitor this market with a view to further develop coverage with assessments.
For the changing INCOterms, ICIS will keep a watch on those assessments with delivered duty paid (DDP) or ex-works (EXW) terms, to keep them in line with current industry usage.
A link to this page will be displayed in the weekly ICIS Europe report for four weeks.