SUBSCRIBER NOTE: Platts to discontinue several iron ore prices, change low grade coverage

S&P Global Platts will discontinue several iron ore prices, start publishing several new differential prices to IODEX and review its low grade fines coverage, with these changes due to come into effect January 2, 2018.

This follows a subscriber note seeking market feedback on this subject published August 11, 2017.

LOW GRADE FINES

Platts will merge the methodology of its low grade iron ore fines price series.

This refers to The Steel Index Iron Ore Fines 58% Fe, 1.5% Alumina CFR Qingdao index (TS01047) and the Platts 58% Low Alumina CFR China (IONC580) assessment.

Platts will merge these two price series from January 2, 2018, publishing two identical values.

Platts will adopt the Market-on-Close assessment process for The Steel Index Iron Ore Fines 58% Fe, 1.5% Alumina CFR Qingdao index.

The merger will entail the following changes: 1) Moving the 6 pm Singapore time cut-off for the TSI index to a 5.30 pm timestamp 2) Ceasing to publish using a volume-weighted average calculation but use end-day pricing techniques 3) Increasing the lot size to 50,000 dry metric ton minimum from the current 20,000 mt minimum (TSI) and 35,000 mt minimum (Platts) 4) Moving the delivery window to 2-8 weeks forward from the publication date rather than "loading within four weeks and delivery within eight weeks of transaction" as is the current TSI standard 5) Changing the TSI specification for phosphorus from 0.04% to 0.05%; changing the Platts specification from 9.5% Loss-on-Ignition to 10% LOI.

Platts will also increase the minimum lot size for its 58% fines assessments (IONC580; IODFE00) and for its 65% fines price series to 50,000 mt from 35,000 mt.

DIFFERENTIALS

In addition to these changes, Platts will launch a series of values that indicate the prevailing spot market differential to the 62% IODEX of a number of low and high grade fines assessments.

Platts will launch a differential to IODEX for Platts 58% Fe CFR China (IODFE00); Platts 58% Low Alumina CFR China (IONC580) and for Platts 65% Fe CFR China (IOPRM00).

This is in response to changing spot market dynamics where low grade fines have tended to trade at a discount or differential to IODEX as opposed to on an outright basis -- be they loading in Australia, India or elsewhere.

Meanwhile, for high grade fines the differential to the 62% bucket is an important indicator for market participants.

DISCONTINUATIONS

Platts will discontinue The Steel Index Iron Ore Fines 65% Fe CFR Qingdao (TS01033) index as high grade fines will be valued using the Platts assessment (IOPRM00).

Platts will also discontinue the TSI Iron Ore Fines 62% Fe 2% Alumina CFR Qingdao (TS01020) index. This is not the price series used as the underlying for the derivatives contracts listed against the TSI medium grade fines index.

Other codes to be discontinued will be - TSI Iron Ore Fines 63.5/63% Fe CFR Qingdao (TS01022) - TSI Iron Ore Domestic Concentrate ex-Shandong Mine (TS01036) - The IODEX iron ore swaps forward curve (AAQTA00; AAQTM00; AAQTN00; IOPSM30; AAQTO00; IOPSQ20; IOPSQ30; IOPCY01) - The TSI-IODEX switch assessments (AAQTB00; ITSIY01; ITSIM10; ITSIM20; ITSIM30; ITSIQ10; ITSIQ20; ITSIQ30).

Platts will also discontinue the TSI Port Stock Price, 62% Fe import parity equivalent ($/dmt).

Platts will continue to publish a TSI forward curve in its Steel Markets Daily publication and on Platts Metals Alert: the discontinuation of the above codes is being put forward to eliminate duplication.

In the case of the TSI-IODEX switch assessments, these will no longer be necessary as the two indices will be aligned from January 2, 2018, as a result of a previous methodology change.

IMPURITY PENALTIES/PREMIA:

Due to impurity penalty/premia being assessed according to the existing Platts assessments from January 2018, Platts will discontinue the following TSI price series:

- TSI Iron Ore Differential per 1% Fe in 60-64% Fe Fines (TSIAB00) - TSI Iron Ore Differential per 1% Fe in 64% Fe Fines (TSIAC00) - TSI Iron Ore Differential per 1% Silica in 60% Fe Fines with Silica 4-9% (TSIAH00) - TSI Iron Ore Differential per 1% Silica in 60% Fe Fines with Silica 4% (TSIAG00) - TSI Iron Ore Differential per 1% Alumina in 60% Fe Fines with Alumina 4% (TSIAE00)

Please submit any feedback, comments or questions 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.