PRICING NOTICE: Fastmarkets implements non-material wording updates to its Metals & Mining assessment methodology

The wording refinements do not materially alter the way Fastmarkets Metals & Mining assesses prices and as such are not anticipated to result in any noticeable changes in Fastmarkets’ assessment price levels or behavior.

Instead, they are intended to describe the assessment process more clearly to increase market participants’ understanding of how editorial judgment is applied in a structured, principles-based and consistent manner.

Please note, these updates do not apply to Fastmarkets Metals & Mining’s index prices, which follow a distinct methodological approach.

There was no feedback during the one-month consultation that was unsupportive of the clarifications proposed.

As explained in the consultation notice, the core elements of this update are as follows:

1. Introducing a statement of Fastmarkets Metals & Mining’s assessment objective

The objective of Fastmarkets Metals & Mining’s assessment methodology is to represent: “The prevailing level at which a commodity of stated specification has or could be expected to have transacted over a defined period of time.”

2. Introducing key principles for evaluating data inputs and determining a hierarchy of consideration

The primary principle is “confidence.” Factors that may influence an assessor’s confidence in information include, but are not limited to:

• The transparency of its reporting and level of detail provided
• Whether it was reported by a directly involved party
• Corroboration or visibility by other market participants
• Appropriate justification or rationale (if evaluating an indication of tradeable level rather than a deal, bid or offer)

Data that Fastmarkets is more confident in would always take precedence over data whose veracity or credibility we are less certain of.

The secondary principle applied when evaluating data inputs is “significance”. This is a gauge of how instructive the information is in determining our stated assessment objective (see above). Significance is considered a more effective principle than a simple ranking of data types because it better accounts for context.

For example, bid and offer data can be of higher or lower significance depending on their relation to other data points. Our general ranking of data types in order of significance is as follows:

• i. Deals
• ii. Tight (competitive) bids/offers*
• iii. Indications of tradeable levels
• iv. Wide (speculative) bids/offers**

*Bids and/or offers within the spread of deal or indication data points. In some circumstances, firm bids higher than deals or offers lower than deals may be considered as significant as deals if they are deemed to indicate a clear directional change of market level, rather than simply reflecting opacity of market information.
**Bids and/or offers outside the spread of deal or indication data points

Fastmarkets MB staff are guided by both the principles of “confidence” and “significance” when evaluating data to fulfil the stated pricing objective. This helps to ensure that editorial judgment is applied in a reasoned and consistent manner in the assessment process.

3. Introducing clearer guidance on when and why data points may be discarded from assessments

Occasionally, Fastmarkets Metals & Mining editorial staff may see it fit to discard a data point from consideration, where it might otherwise be expected to have relevance in determining the assessment. This is different to simply prioritizing higher-quality (higher-confidence or higher-significance) data when assessing the final price or range.

The application of editorial judgment to discard an otherwise relevant data point is guided by the principle that Fastmarkets Metals & Mining aims to assess the “open/competitive market” for the product and basis in question. That is, where buying and selling interest is competing on broadly similar terms to arrive at deals.

Deals, bids or offers with side terms that we are unable to accurately account for, or subject to unique and unusual seller-buyer relationships, would typically be deemed unrepresentative of the “open/competitive” market and hence discarded.

This principle is applicable regardless of the motivations of the data submitter. Indications of tradeable levels may be discarded if the submitter is suspected of deliberately misleading Fastmarkets to unfairly influence the assessment.

Other changes
As well as introducing the core elements outlined above, Fastmarkets has also made further non-material edits to algin the general style, order and language between its Metals & Mining assessment methodologies. A few methodology documents may therefore look somewhat different following this update, though none of these changes have a material bearing on their application.

Schedule
Please click here to see the updated Fastmarkets Metals & Mining assessment methodology general template. Individual assessment methodologies may contain additional market-specific detail.

As there are several individual methodology documents for various Fastmarkets Metals & Mining assessments, it may take a few days from this notice for each to be updated to reflect the new template. All methodology documents will be fully updated by October 1 at the latest.

To provide feedback on these changes, or if you would like to provide price information by becoming a data submitter, please contact Peter Hannah by email at pricing@fastmarkets.com. Please add the subject heading “FAO: Peter Hannah re: Assessment Methodology.”

To see all of Fastmarkets’ pricing methodology and specification documents, go to https://www.fastmarkets.com/about-us/methodology.