SUBSCRIBER NOTE: S&P Global Platts proposes combining Platts, TSI CFR Turkey ferrous scrap price discovery

S&P Global Platts proposes combining the price discovery process for ferrous scrap imports to Turkey by merging the daily assessment of Turkish deepsea premium heavy melting scrap I/II (80:20) imports with The Steel Index's HMS 1&2 80:20 CFR Iskenderun port index effective September 1, 2017.

The proposal includes a revision of the price specifications to best reflect fair value in the market, as well as a revision of the underlying methodology.

Under this proposal, Platts would focus the price assessment process for its Turkish scrap price series on the Market-on-Close (MOC) assessment approach. This methodology has proven particularly robust in dealing with the trading patterns in the Turkish scrap import market.

There would be no volume-weighted average calculation as price formation will be focused on the end-of-day assessment. Intra-day price movement is now regularly observed in the Turkish scrap import market and the market-on-close approach would allow Platts to capture such movement. Platts seeks market feedback on its proposal by April 10, 2017.

DATA COLLECTION: Platts proposes to collect transactional data until 4:30 pm UK time. The data would be collected by surveying active market participants on the trade route, while any market participant would also be able to submit data to the TSI price reporting portal.

Platts would discontinue receiving submissions pursuant to the existing TSI Data Provider agreements for companies submitting to TSI's Turkish scrap index.

SPECIFICATION: Platts proposes to normalize transactional data to a premium HMS 1&2 (80:20) standard. This normalization process would be carried out using observed market trade differentials between HMS 1&2 blends from various supply regions, such as the US East Coast, Baltic ports or Benelux and UK terminals.

Other grades, such as shredded or bonus scrap, would be normalized back to a premium HMS 1&2 (80:20) standard.

Platts proposes to publish the price series on a CFR Turkey basis, rather than CFR Iskenderun port, in light of the consistency in demand between the three large scrap-melting regions in Turkey; to reflect material for delivery three-eight weeks forward, and to take into account cargoes whose tonnage exceeds 10,000 mt. These cargoes may be a mixture of grades. Platts proposes to use "L/C at sight" as the payment basis of the combined price series.

The price would be published as a single number to two decimal places, with the value rounded to the nearest $0.25/mt.

DATA USAGE: Platts proposes to value the market using the most recent confirmed and repeatable transactional data normalized to a premium HMS 1&2 (80:20) standard, as this would best-reflect the tradeable value of this grade delivered into Turkey at 4.30pm UK time.

If firm, confirmed bids or offers demonstrate market value has changed from the most recent transactions, Platts could reflect this change in value in its price series.

As well as transactions, bids & offers, Platts proposes to allow for the use of tradeable values collected from active market participants across the supply chain in determining market value, thereby increasing data collection in periods of illiquidity.

In the absence of relevant transactional data, firm bids or offers, tradeable values would be used to value the market.

Under this proposal, Platts would publish on a daily basis a full and detailed rationale for the day's published price, detailing how it was determined.

Platts proposes to retain the TS01011 product code and discontinue the FETKD00 product code.

INDEX NAME In light of these proposed changes, Platts proposes to change the name of the price series from: TSI HMS 1&2 80:20 Turkish Imports CFR Iskenderun Port, to: Platts TSI HMS 1&2 (80:20) CFR Turkey. The following codes would be affected by this proposed name change: TS01011; TS01049; TSMAK03.

Please submit any feedback, comments or questions about this proposal to pricemethodology@spglobal.com by April 10, 2017.

For written comments, please provide a clear indication if comments are not intended for publication by Platts for public viewing. Platts will consider all comments received and will make comments not marked as confidential available upon request.