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SUBSCRIBER NOTE: Platts proposes to revise Chicago ethanol terminal methodology

S&P Global Platts proposes to revise the methodology for its Ethanol Chicago (terminal) assessment, effective May 1, 2019, to better reflect offtake optionality at the Kinder Morgan fungible ethanol system.

The basis of this assessment would remain Intertank Transfer (ITT) and would reflect the Kinder Morgan Argo and Chicago fungible system, which includes the Argo and Chicago (Stony Island) terminals. Platts proposes to update the Platts Ethanol Chicago (terminal) assessment to reflect other offtake options at the terminals such as barge, rail and truck, effective May 1.

Under the proposed change, the option to take delivery of product other than by ITT at the Kinder Morgan terminals will be at the buyer's option, and all incremental costs associated with the chosen offtake option would be borne by the buyer. A seller should not unreasonably withhold any offtake option, and any associated costs for non-ITT offtake options must be demonstrably reasonable and typical.

NOMINATION GUIDELINES: Platts is proposing that for offtake via barge, a buyer should nominate a three-day loading period within the 5-15 day assessment laycan as well as a performing vessel, at least five calendar days prior to the first day of the three-day loading period, subject to terminal acceptance. The seller should nominate a loading terminal at least 48 hours prior to the first day of the three-day loading period.

If a buyer chooses to take delivery of product via truck, the buyer should nominate a specific lifting date at least one calendar day prior. This is in line with current stated nomination guidelines for ITT. Platts is also seeking feedback on nomination standards for offtake via rail.

For all nominations, Platts proposes an end-of-day time cutoff of 16:00 CT (17:00 ET). Any nomination provided after this time would be considered as being for the next day.

PROPOSED INCREMENT CHANGE: In addition, Platts is also proposing to revise the standards of incrementability for its Ethanol Chicago (terminal) assessment during the Market on Close assessment process, to better reflect current trading and pricing granularity.

Platts is proposing that bids and offers may be improved by a maximum of 10 points per 15 seconds, from the current 25 points per 30 seconds, effective May 1. All other timing and incrementability standards will remain unchanged. Platts may notify the market of any adjustment to the standard increments in the event of market volatility or a disruptive event.

All other aspects of the pricing methodology for the Ethanol Chicago (terminal) assessment would remain the same, including the specification, volume, timing and RINS transfer mechanism.

Please send all feedback or questions to americas_ags@spglobal.com and pricegroup@spglobal.com by March 30, 2019.

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 to the public upon request.