SteelBenchmarker™ Attributes
The SteelBenchmarker™ is designed to provide a reliable set of benchmark prices for use by participants in the steel industry without requiring the disclosure of their actual transaction prices. The steel products for which we ask the providers to give their price opinions are the benchmark (or generic) ones that are used day in and day out when buyers and sellers are seeking to "discover" the base market price for the commodity in question.
For the home markets, the price opinion is the booking price, ex-works (FOB mill), for near-term delivery for commodity-grade product for the mid-sized buyer. For the export market, it is the price opinion of the average price, for nearby and distant customers, FOB the port of export. For steel scrap, the price opinion is for the USA, delivered to the steel plant.
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The price input opinions are totally confidential.
Benchmark prices published will be based on the average of the price opinions received.
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There will be a sufficient number of price opinion inputs, and a statistical method to remove the outliers, that the reported results should be valid statistically. No individual company's reported opinions will represent more than fifteen (15) percent of the opinions used to calculate any reported benchmark price.
Benchmark prices will be published simultaneously on the second and fourth Wednesday mornings of each month.
SteelBenchmarker™ providers will be e-mailed the steel benchmark price results at the same time they are released. Non-providers may subscribe to receive the benchmark price release.
The system has a number of built-in features that assure its effectiveness and prevent its misuse: processes and procedures.
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Steel benchmark prices will be "robust." The word "robust" in the world of financial derivatives means that the price is accurate and not able to be manipulated. Our goal is to have at least 25 to 50 inputs for each product.
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When providers e-mail their price opinions, they will not receive any feedback if their opinions as to the prices are high or low, and/or have been eliminated as outliers.
The benchmark prices will be calculated by a third-party computer that is looking at the price inputs but not the names of the providers. Fall back procedures will be set in place to publish the steel benchmark prices and take corrective actions if there are unexpected problems.
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An outside fiduciary will regularly audit, on an unannounced basis, the SteelBenchmarker™
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