SUBSCRIBER NOTE: Platts proposes updates to USGC naphtha floating price assessment practices

S&P Global Platts is proposing a number of changes to its Market On Close assessment process for US Gulf Coast naphtha barges, aimed at simplifying the process and aligning it even more closely with typical trading patterns in the USGC market.

With effect from March 1, 2017, Platts proposes to only publish floating bids, offers and intentions to trade in the MOC process for naphtha barges that settle in reference to a value averaged over at least three publishing days, in line with typical trading patterns in the USGC market.

Gulf Coast naphtha typically trades at a differential to Gulf Coast conventional unleaded 87 gasoline barges. For naphtha barges with delivery laycans within seven days of a seasonal change in Reid Vapor Pressure levels in Gulf Coast gasoline, Platts will only publish bids or offers in the MOC with deemed (fixed) pricing dates. This is in order to avoid slippage risk where possible delays in discharge availability at the terminal pushes floating pricing dates into the gasoline RVP transition, which could have a significant impact on the price of the naphtha.

There are typically two such shifts to lower RVP levels in the spring and another two in the fall, with RVP shifts to be detailed in separate subscriber notes.

Platts understands that stating deemed dates for pricing settlement is typical practice, reflecting industry feedback. Deemed pricing dates would normally align with the three-day delivery laycan for naphtha barges. Pricing dates commonly account for weekends by taking the last two pricing dates of the prior week and the first of the following week when the middle of the laycan falls on a Friday or Saturday, and by taking the last pricing date of the prior week and the first two of the following week when the middle of the laycan falls on a Sunday or Monday.

Pricing dates for delivery where the laycan falls on a holiday or a day when Platts does not publish US assessments also are detailed here. If the holiday were to fall on a Friday, standard pricing would be on the preceding Wednesday and Thursday and the following Monday. If the holiday were to fall on a Monday, standard pricing would be on the preceding Friday and the following Tuesday and Wednesday. For any midweek holiday, pricing would fall one business day before and two business days after in line with standard market practice.

With the exception of the periods around the seasonal gasoline RVP changes, Platts will continue to publish bids or offers in the MOC with three-day pricing around or after Commencement of Discharge or Completion of Discharge as another option for pricing.

Additionally, Platts proposes to no longer publish bids or offers in the MOC with floating pricing linked to the declaration of Notice of Readiness ("NOR") to discharge. Platts understands that unpredictability and possible delays in actual discharge timing add an uncomfortable degree of uncertainty to any bids or offers with NOR-related pricing options.

Please send all comments or questions on these proposals to americas_products@spglobal.com and pricegroup@spglobal.com by February 17, 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 written comments not marked as confidential available upon request.