TSI adds new iron ore reference prices
The Steel Index (TSI) will today launch two additional iron ore reference prices. The supplementary prices will be published alongside its existing respected and widely used iron ore indices, which will continue unchanged in every respect.
The publication of this extra information comes in direct response to requests from industry participants keen to have an additional reference point for physical index-linked pricing arrangements. The new reference prices will assist industry participants enthusiastic to see TSI’s iron ore prices increasingly applied as the price basis in long-term supply contracts.
**New Reference Prices**
· 62% iron content, low alumina (2%), fines, CFRFO Qingdao port, China.
· 63.5/63% iron content, standard alumina (3.5%), fines, CFRFO Qingdao port, China.
The supplementary reference prices will be based on the same data set as TSI’s existing 62% Fe index, will be non-origin specific and will adhere to TSI’s rigorous methodology, with appropriate price adjustments made for iron content, alumina content and delivery port.
“The addition of the new reference prices will make it easier for parties using long-term supply contracts to index-link to a relevant spot series,” says Rory MacDonald, Head of Iron Ore Operations at TSI. “For example, the 2% Al reference price is in line with quality ores mined in the Pilbara in Western Australia and in the Southern System in Brazil from where the majority of long-term supply originates, while the 63.5/63% Fe reference price is relevant to many ores mined in India.”
The pricing point for both supplementary series is CFRFO Qingdao port China, to give market participants readily available reference prices for this widely used port. TSI’s existing 62% Fe and 58% Fe iron ore indices with 3.5% alumina content remain priced CFRFO Tianjin port China.
TSI’s data-driven methodology, in which reference prices are based on actual transaction prices collected from buyers and sellers through a secure on-line system, is greatly favoured by most companies over telephone-polling approaches.
TSI’s iron ore and steel index prices are widely used by miners, traders and steel mills worldwide as the basis for their index-linked pricing arrangements. Its benchmark 62% Fe index provides the settlement prices for over 95% of all iron ore financial contracts cleared worldwide, having been adopted by the Singapore Exchange (SGX), LCH.Clearnet (London) the CME Group (based in Chicago), and NOS Clearing (Oslo). To date over US$ 4 billion (30 million tonnes) of iron ore swaps and options have been cleared using TSI’s iron ore indices
Note to Editors:
The Steel Index (TSI) is the premier specialist source of independent iron ore, steel and scrap price information based on actual transactions. TSI is also currently developing coking coal reference prices.
Iron ore prices are published daily at 12:00 GMT. Steel and scrap prices are published weekly every Monday and Friday respectively, with each price representing the average transaction price for the previous calendar week.
Transaction price data is submitted confidentially to TSI on-line by companies buying and selling a range of relevant iron ore, scrap and steel products. TSI’s index reference prices are then calculated using transparent and verifiable procedures.
TSI’s indices are widely used by steel mills, miners, traders, distributors and manufacturing companies worldwide as the basis for their physical pricing arrangements. TSI’s indices are also used as the industry standard in the settlement of ferrous financial contracts.
Singapore Exchange (SGX), LCH.Clearnet (London), CME Group (Chicago) and NOS Clearing (Oslo) all use TSI’s iron ore index for settling their monthly cleared iron ore financial contracts. LCH.Clearnet also uses TSI’s prices for the settlement of two European hot rolled coil steel swap contracts and its Turkish imports scrap contract. In all cases, settlement prices are the average of TSI’s reference prices published in the expiring month.
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