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After a month-long consultation period, Fastmarkets launched the Turkey import steel scrap month-to-date deal-weighted average on Monday August 2 to provide a tonnage-weighted average price for steel scrap imported into Turkey for each calendar month.
The new price is distinct from, and is designed to complement, Fastmarkets’ existing daily index for steel scrap, HMS 1&2 (80:20 mix), North Europe origin, cfr Turkey.
The existing daily index gives a tonnage-weighted price on each day, but in addition to deals it also considers bids, offers and market participants’ estimates to be able to indicate the prevailing market level in the absence of trading.
The new deal-weighted average will not consider bids, offers or market participants’ estimates, and will only be updated when deals occur. Moreover, the tonnage weighting will be continuously applied and updated throughout the month, thereby giving a true tonnage-weighted average price at the close of each month.
The month-to-date deal-weighted average will be reset at the start of each month. If no deals are heard at the start of a given month, the previous month’s closing price will be published each day until deals are heard, from which point only the deals heard in the current month will be used.
Fastmarkets has received feedback indicating that such an index will be of particular use to those companies that settle monthly scrap supply contacts, as is common in the European steelmaking industry, for example.
As with the daily index, material of different grades that falls within the target specification range will be normalized to the index base specification. Data will be normalized to the base specification using models developed in-house and based on regression analysis of the collected data points.
The analysis allows Fastmarkets to capture the value-in-use applied by the market to different materials, and to normalize them to a single specification. The normalization coefficients for the indices are updated every month to reflect the constantly changing value-in-use relationship of different origins and grades.
Fastmarkets’ index methodology screens outliers and applies a quantity-weighted model to ensure that the deal-weighted average is the most robust in the industry. Fastmarkets has no financial interest in the level or direction of the index.
The specification of the new index is as follows:
MB-STE-0894 steel scrap, HMS 1&2 (80:20 mix), month-to-date deal-weighted average, North Europe origin, cfr Turkey, $ per tonne Quality: HMS 1&2 (80:20 mix compliant with ISRI specifications 200-206; grades normalized – Shredded, HMS 1&2 (70:30), HMS 1&2 (90:10), HMS 1, Bonus Grade, P&S, A3 material) Quantity: Minimum 5,000 tonnes Location: cfr Iskenderun, Turkey Timing: Within six weeks Unit: USD per tonne Payment Terms: Cash, other payment terms normalized to basis Publication: Daily, 4pm London time Notes: Bulk carrier from Northern Europe.
To provide feedback on this price, or if you would like to provide price information by becoming a data submitter to this price, please contact Ross Yeo by email at pricing@fastmarkets.com. Please add the subject heading ‘FAO: Ross Yeo, re: Turkey steel scrap month-to-date deal-weighted average.’
To see all Fastmarkets’ pricing methodology and specification documents, go to https://www.fastmarkets.com/about-us/methodology.
For answers to likely frequently asked questions about this price, see the related article via this link.