S&P Global Platts Price Assessment Methodology Explained · web based Daily PDFs Platts On The Net...
Transcript of S&P Global Platts Price Assessment Methodology Explained · web based Daily PDFs Platts On The Net...
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S&P Global Platts Price Assessment Methodology Explained
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Platts Price Assessments
Spot Markets / Benchmarks
Platts – An introduction
Q&A
Market on Close - In Depth
Methodology / MOC Principles & Guidelines / Process
Agenda
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Enabling the markets to perform with greater
Transparency & Efficiency since
Platts – an introduction
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Platts – an introduction
Editorial and market assessments are conducted
with complete Independence & Impartiality
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Platts – an introduction
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Platts – an introduction
PETROCHEMICALS
BIOFUELS
AGRICULTURE
ELECTRIC POWER
NATURAL GAS OIL SHIPPING
COAL METALS
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Platts – an introduction
Linking the chain by providing all participants in the physical and futures markets
with the most reliable source of pricing benchmarks, market news and analytical
information
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Platts – an introduction:
…and various delivery formats and options:
Delivery
FORMA
T
DELIVER
Y
Real-time news
and price information
Geospatial data
and maps
End-of-day
market data
Conferences
Newsletters
and reports
Forums
Vendor terminals
Excel Add-In/API
Proprietary
web based
Daily PDFs
Platts On The Net
FTP
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Understanding Platts Benchmarks
• Understanding Benchmarks
• Price Assessment Methodology
• Price Assessment Process
• Principles & Guidelines
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Benchmark Price Assessments: Key Spot Markets
Houston
ARA
(Amsterdam
Rotterdam
Antwerp)
Singapore
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Amsterdam / Rotterdam / Antwerp (ARA)
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Why is Amsterdam / Rotterdam / Antwerp (ARA) so important
One of the world’s busiest
ports and Europe’s refining
and petrochemical hubs
with around 2.2 million
barrels/day of refining
capacity
A major logistics hub –
pipelines, rivers, publically
accessible storage tanks –
it’s a deep water port
capable of discharging the
largest vessels in the world
It’s a key import and export
location open to multiple
market participants
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Benchmark Price Assessments Market requirements
Benchmarks are used as reference points in commodity trading and to derive related commodity prices. They
• Achieve convergence between market values and published values
• Provide full transparency
• Display responsible behavior
• Fully reflect market value
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Benchmark Price Assessments Essential DNA
Adhere to international
norms of trading
Open to industry scrutiny
Chain formation high degree of
circulation
Market acceptance
Lead to the development of a forward market
Clearly defined assessment methodology
High degree of transparency
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Benchmark Price Assessments
• Platts benchmarks are used to price term contracts
• Futures settlements are often tied to Platts spot market assessments
• Derivatives “price out” against Platts spot price assessments or futures settlements
The significance
Focus, Impact and Relevance
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Q&A
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A robust
How data is
analyzed to
produce a final
value
What
is being
assessed
How data is
collected – Platts
Price Discovery
Process must define
Market on Close in depth Methodology
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1: What is being assessed
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2: How data is collected
• A structured price-discovery system designed to yield a price assessment reflective of market values at the close of the typical trading day.
• Similar information gathering systems are common in the futures markets where energy and financial exchanges publish daily settlement prices reflective of activity at the close of markets.
Platts Market on Close defined
The Market on Close allows transparent and fully verifiable market information to form the basis of the daily price assessment.
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Reporters collect trade information all day
2: How data is collected
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With price assessments, not all information can be taken at face value
2: How data is collected
Bids, offers and transactions in…
Processing information
Heard & Intra-day pages
Transparent,
verifiable price
assessments out.
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2: How data is collected
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2: How data is collected
Transparent:
named bids/offers
Real-time technology for
open price competition
End of day assessment
‘windows/e-window
Assessments reflect
tradable value (or
the traded value) at
market close
Values are based
on Market on Close
(MOC) principles
Assessments based on
firm bids/offers and
traded activity
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2: How data is collected Physical & swaps market on close timeline
09.00 – 15.45
Bids and offers
submitted
15.45 – 16.05
No fresh physical
bid/offers accepted
16.15 – 16.20
No more new
derivative/swaps
spreads (time
spreads, quality
spreads, etc.)
16.25 – 16.29:59
Final changes to
physical bid/offers
can be made
09.00 16.00 17.00 15.45 16.30
16.30
Market on Close
All bid/offers expire
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2: How data is collected A constant process
Seen Another Way
• Bids, offers and transactions are taken all day and published by Platts
• Cut-off for new bids, offers and transactions
• Platts continues to analyze data
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Amongst the most transparent markets in the world
2: How data is collected View of Market on Close
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2: How data is collected Market on Close guidelines
General Guidelines: • All bids / offers must be available to the market • Sufficient time to react to the bids and offers • Transactions between affiliates are not used in the assessment process • Open to any credible and credit worthy market participant
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2: How data is collected Market on Close guidelines
General Guidelines:
• Data must adhere to Platts’ quality guidelines
• Published indications are ‘firm’ and transactable
• All participants must be contactable at all times during the
assessment process
• Bids and offers via brokers are accepted
• Defined audit trail
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2: How data is collected
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eWindow in action
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Reported bids, offers and trades
($/mt, Rotterdam 3.5%S Barges for prompt ‘Front End’ delivery, February 1 2013)
627
629
631
633
635
637
639
641
643
645
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0
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0
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MERCURI
A
ARGOS
VITOL1
VITOL2
WILJO
OW
AGEAN
CARGILL
BP
GUNVOR
CHEMOIL
TRADES
2: How data is collected eWindow in action
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2: How data is collected
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Market on Close concepts
Incrementability
• Acceptable bids/offers move in incremental small steps
• Price increments are set to the market/environment
• Price changes occur regularly
• Systems in place to handle extreme volatility
Price Gapping
• Discouraged, and typically not used for assessments
• Price makers should bid and offer at reasonable market levels
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2: How data is collected
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Market on Close concepts
Open to any credible party, not just those already bidding and offering
Bids/offers can be withdrawn at any time, assuming no prior interest has been expressed
‘Keens’ or ‘wants’
Repeatability
An expression of interest to transact at the published bid or offer price
Following the trade a market maker can re-bid or re-offer
Price taker does not have option to add a bid or an offer
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$1/mt per 20 seconds
$0.03/b per second
$1/mt per minute
$0.05/b per second
30 seconds 1 minute
None 2 minutes to close
Price discovery is
quicker, so MOC
timings reflect that
eWindow is
an advanced
communication tool
Based on
ICE software
Traders/brokers
represent their own
bids/offers
Platts editors continue to
monitor bid/offer
activities
Information is presented
clearly and updated
immediately
All MOC methodology is
built into the software
Price move/time
Rebids/Reoffers
Final State
eWindow Manual
Platts eWindow and manual MOC environments
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A H Meyer & CIE AG
A.P. Moller – Maersk AS
Abengoa Bioenergy
Addax
ADM International Sarl
Aegean Petroleum
AIC Limited
Alcodis SA
Amerex Petroleum
AOT
AOT Trading AG
Apache North Sea Ltd
Apex Oil Company, Inc.
Arcadia
Archer Daniels Midland
Argos
Aspen Oil (Broking) Ltd.
Associated Bunkroil
Astra Oil
Atlantic
Australia and NZ Banking
Mabanaft
Bakri Trading
Banca IMI S.p.A
Banco Santander, S.A.
Barclays Bank plc
BASF Intertrade Ag
BB Energy
Belgische Olie
Maatschappij
Belgomine NV
BGC Radix Energy L.P.,
BioUrja Trading, LLC
Blue Ocean
Associates Ltd
BNP Paribas
BP
Brightoil
Buckeye Energy Partners
Bunge
C Chemicals Pte Ltd
Cargill
Center Oil Company
Cepsa International BV
Chemoil Corporation
Chemoil Energy Limited
Chevron
ChevronPhillips
Chemical Co
Chimbusco Pan Nation
China Aviation Oil
China National
United Oil Corp
Chinaoil
CHS Inc.
CIMA Green, LLC
Citgo Petroleum
Citi
CMT Fund XXVI Ltd
Coastal Oil Singapore
Colonial Oil
Industries, Inc.
Commerzbank AG
ConocoPhillips
Consort Bunkers Pte. Ltd
Copersucar Trading AVV
Cosmo Oil Co. Ltd.
Credit Agricole
Credit Suisse
Crop Energies GmbH
Czarnikow Group Ltd
Daelim Corporation
Daxin Petroleum Pte Ltd
DCP NGL Services, LLC
Deutsche Bank AG
DLH Fuel Company mbh
Dow
DS Mineraloel GmbH
Durfour Petroleum LP
EcoEnergy Inc.
Eminent Energy Limited
Emirates National Oil Co
ENI
Enjet, LLC
ENOI S.p.A.
Enterprise Products Ops
Eon Energy Trading SE
ERG SpA
Essar Oil UK Ltd
Ets Storme & Cie
ExxonMobil
FAL Oil
Flint Hills Resources
Fritz Meyer AG
Galaxy Petroleum
Glencore
Gavilon, LLC
Gazprom M&T
Gazpromneft Trading
George E. Warren Corp.
Ginga
Global Companies LLC
Global Energy Resources
Global Trans Petrochem
GP&Q Inc. dba Center Oil
Gracewood International
Great Island dba Gulf Oil
Greenergy Fuels Ltd
CS Caltex Singapore
GT Commodities
Gulf Oil
Gulfstream Trading Ltd.
Gunvor
Hanwha International
Harvest Energy Ltd.
Hawkeye Gold, LLC
Hess
Hin Leong Trading
Holt Global Ltd
ICAP Energy Pte Limited
Idemitsu Kosan Co.,Ltd
Independent Petroleum
Ineos
Inpex Corp
Interchem
IPC
IPG Ltd
Island Bunker Olis Ltd.
Itochu
J Aron
J.P. Morgan
JB Commodities AG
John W. Stone Oil Dist.
Kanematsu Corp.
Kangqi
Kastratu Group
Kempler & Co.,Inc.
Kernel Oil Pte Ltd
KG Gekol
KLM Royal Dutch Airlines
Koch
Kolmar Americas Inc.
Kuo Oil (S) Pte Ltd.
Lansing Trade Group
Lantmannen Argroetanol
LG International Corp.
Lia Oil SA
Licorne Petroleu,
Litasco SA
Louis Dreyfus
Lukoil
Lyondell Chemie
Macquarie Bank
Mansfield Oil Company
Marathon
Marubeni
Masefield
MatrixBharat
MC Energy, Inc.
Merchant Commodity
Mercuria
Merrill Lynch
Metroplex Energy Inc.
Mieco, Inc.
Mitsubishi
Mitsui
Mocoh SA – Geneva
Morgan Stanley
Motor Oil (Hellas)
Murex Ltd
Musket Corp.
Nakagawa Bussan
Natixis
Neste Oil
Nexen Energy Marketing
NIIC Holding Corp.
NIOC Bunkering B.V.
Nittan Capital
Noble
Nomura International plc
North European Oil Trade
North Sea Group
NuStar Marketing LLC
O.W.
OceanConnect
Oel-Pool AG
Oil Search Limited
Oilchart International BV
Oliehandel Klass de Boer
Omneo Trading AG
OMV Trading Services Ltd
ONEOK HydrocarbonLP
Opet Trade
P.M.I.
Paz Ashdod Refinery Ltd
Pertamina
Petraco Oil Company Ltd.
Petredec Ltd Bermuda
Petro China
Petro Summit Pte. Ltd
Petro-Diamond
Petrobras
Petrocom Energy Group
Petrodom-EKO Domanski
Petrofina SA
Petroleum Traders Corp
Petronas Trading Corp
Petroned BV
PetroSeraya Pte. Ltd
Petro Vietnam Tradin
Phibro
PKN Orlen S.A.
Plains Marketing LP
Preem AB
PTT International Trading
PVM Oil Associates
Raizen Trading LLP
Raystar Corporation
Reliance
Repsol
RILISA, Inc.
Rixo International Trading
Rotterdam Marine Fuels
RWE
S-Oil Corp
S.E.T. Select Energy
SABIC Petrochemical BV
Sahara Energy
Saicat Energy SA
Santos Ltd.
Saras SpA
SARPD Oil Afrique
SEB Merchant Banking
Shell
Sinanen co.Ltd
Singapore Petroleum
Sinochem
Sinnopee
SJB Petroleum Products
SK Energy Europe Ltd
Socar Trading S.A.
Societe Generale
Sprague Energy Corp.
Standard Bank Plc
Standard Chartered Bank
Statoil ASA
Strong Petrochemical
Sucden Geneva SA
Sumitomo Corporation
Sunoco, Inc.
Talmay Trading
Tauber Oil Company
Tenergy Trading SA
The Falzon Group
Total Oil Trading SA
Toyota Tsusho Petroleum
Tradition Financial Services
Trafigura
Trammo Gas International
Transcor Oil Services
Turkish Petroleum
UniCredit Bank AG
Unipec
US Oil
Valero Energy Limited
Van Raak Distributie NV
Vattenfall Energy Trading
Vector Energy AG
Verbeke Bunkering NV
Verbio AG
Vermont Marine Bunkering
VERTICAL North America
Viewsino Oil Pre Ltd.
Vilma Oil SL
Vinmar International
Vitol
Wanxiang Resources
Wells Fargo Commodities
Westport Petroleum, Inc.
Wiljo NV
Winson Oil Trading
Woodside Petroleum
World Fuel Services
Platts Market on Close players More than 280 participants
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Vetting for eWindow Market on Close
Participation has many levels
• Business profile
(history, registration, ownership, documents of incorporation etc.)
• Financial standing creditworthiness
(bank references and credit lines, or evidence of ability to issue Letter of Credit
against first class bank in the absence of credit lines)
• Market reputability
• Trade performance history
• Counterparty acceptance
• Adherence to Platts editorial guidelines
• Adherence to operational and logistical market standards
(for best endeavor basis performance)
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Just to re-cap
The purpose of a transparent methodology
• Increases confidence in price benchmarks • Encourages responsible behaviour • Simplifies participation in the price discovery process • Establishes high quality information for decision-making
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Producing the final assessment
Platts Price Assessment Methodology is built on two fundamental principles: • Price as a function of time • Transparency
The principles
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3. Producing the final assessment Time
Importance of Time Sensitive Data
Importance of Time Sensitive Data
• Time stamps allow for true reflection of spreads
• Platts assessments are time sensitive and clearly time-stamped
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3. Producing the final assessment value = function of time
A volatile trading day for Brent futures
110.20
110.00
109.80
109.60
109.40
109.20
109.00
108.80
108.60
110.60
110.40
Trades
(Standard)
12/19
(Left) /BRN.ICE[0] – Feb13 Brent Crude Oil Electronic ICE
Price
December 19, 2012 Platts’ Global MOC times
2:00 9:59 11:10 12:32 14:23 15:44 16:31 16:45 17:05 17:29 18:31 19:46 20:28
Singapore &
Dubai Close:
$108.90/barre
l
Houston
Close:
$110.40/barre
l
London
Close:
$109.54/barre
l
Crude futures fall
by 60 cents before
London MOC
Crude futures
rally by 90 cents
after London MOC
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Producing the final assessment
Market on Close time stamping
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Producing the final assessment Principles and Guidelines
Founding principles:
• Outright prices take precedence over floating prices
• Assessment process accounts for transactions concluded throughout the
Market-on-Close process, plus the backwardation or contango structure
• Deals are subject to several tests including extending the MOC process to test
repeatability
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Reported bids, offers and trades
($/mt, Rotterdam 3.5%S Barges for prompt ‘Front End’ delivery, February 1 2013)
627
629
631
633
635
637
639
641
643
645
16:0
0
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1
16:0
2
16:0
3
16:0
4
16:0
5
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6
16:0
7
16:0
8
16:0
9
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0
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1
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2
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3
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MERCURIA
ARGOS
VITOL1
VITOL2
WILJO
OW
AGEAN
CARGILL
BP
GUNVOR
CHEMOIL
TRADES
KCEL1
KCEL2
TOTSA
CARGILL
OW
BP
MERCURIA
GUNVOR
LITASCO
Market on Close In action
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Assessments are a result of Tested Market Data
Mercuria offered 637.50 OFFER
BP bid 637.00 BID
MARKET ON CLOSE 637.25
Platts typically assesses value between the highest bid and
lowest offer still standing at the close of the MOC process
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Q&A