SUBSCRIBER NOTE: S&P Global Platts to combine Platts, TSI CFR Turkey price discovery

S&P Global Platts will combine 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.

This will include a revision of the price specifications to best reflect fair value in the market, as well as a revision of the underlying methodology.

Platts will 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 will 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 should allow Platts to capture such movement.

This note follows a proposal note on the subject published March 23, 2017, and a period of market feedback that ran until mid-April.

Platts notes that the price difference between the Platts assessment and the TSI index averaged minus $0.15/mt over the course of 24 months (from January 2, 2015 to December 30, 2016), with the future specification being at a discount to the current specification.

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

Platts will no longer receive submissions pursuant to the existing TSI Data Provider agreements for companies submitting to TSI's Turkish scrap index.

SPECIFICATION: Platts will normalize transactional data to a premium HMS 1&2 (80:20) standard.

This normalization process will 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, will be normalized back to a premium HMS 1&2 (80:20) standard.

Platts will 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; Platts will reflect material for delivery three-eight weeks forward, and take into account cargoes whose tonnage exceeds 10,000 mt.

These cargoes may be a mixture of grades.

Platts will use "L/C at sight" as the payment basis of the combined price series.

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

DATA USAGE: Platts will value the market using the most recent confirmed and repeatable transactional data normalized to a premium HMS 1&2 (80:20) standard, as this best-reflects 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 and offers, Platts will 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 will be used to value the market.

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

Platts will retain the TS01011 product code and discontinue the FETKD00 product code.

INDEX NAME In light of these proposed changes, Platts will 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 will be affected by this proposed name change: TS01011; TS01049; TSMAK03.

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

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.