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Certain market participants have expressed concerns that pricing data points relating to small lots are neither representative of typical market practice nor mainstream, repeatable spot prices. As such, they have suggested an increase in the minimum tonnages of some of our minor metals assessments.
In light of these initial market comments, Metal Bulletin has conducted an internal analysis based on the market data collected over the last two years.
As a result of the analysis and initial market comments, Metal Bulletin is proposing to raise its minimum tonnage for the following:
These proposals are now subject to consultations that will end one month from the date of this pricing notice, on Thursday October 4. Subject to market feedback, changes will take place from Friday October 5.
All Metal Bulletin price specifications define the minimum lot size accepted.
The goal of a minimum tonnage is to exclude any deal that, because of its small size/high price, could add bias to the Metal Bulletin published price. At the same time, the minimum tonnage must be as low as possible so that the number of deals excluded is the smallest.
Details of internal data analysis can be found in the above pricing notices.
Metal Bulletin has also considered the possibility of increasing the minimum tonnage of its other minor metals assessments published from London, but concluded it would not have the same benefit on pricing.
The increase in minimum tonnages reduces the possibility that a price assessment will be moved on the basis of a small-tonnage trade, concluded above the mainstream market. In turn, this avoids introducing volatility which is not in fact present in the market as a whole. Metal Bulletin will continue to use its expert judgement to exclude data that it considers to be an outlier, as set out in Metal Bulletin’s price methodology document.
When volume information is available, it is taken into consideration in the assessment process. For instance, typically a deal with a bigger volume will carry more weight in the price reporter’s judgement than a smaller volume transaction. However, price reporters will also consider, for instance, to normalize or discard a price reported for a deal with an abnormally large or small volume.
To provide feedback on the above consultations or if you would like to provide price information by becoming a data submitter to these prices, contact Ewa Manthey by email at: pricing@metalbulletin.com. Please add the subject heading “FAO: Ewa Manthey, RE: Minor metals minimum tonnages”.
Click here to see all of Metal Bulletin’s pricing methodology and specification documents.