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Platt's Metals Guide to Specifications Since January 2, 1930, Platt's Metals Week (originally E&MJ Metal & Mineral Markets) has served as an independent price authority for the international nonferrous metals industry. Platt's Metals Week's prices are widely used by the industry and government for evaluating pricing of metals and ores, levying taxes and tariffs, determining freight rates, and evaluating new projects.Because of the large variety of prices and the different methods used to determine each, it is important to understand the ground rules which Platt's Metals Week uses to keep the price series as consistent as possible. An overview of how the Platt's Metals Week prices are gathered, computed, and averaged follows. Types of prices As distinguished by frequency, Platt's Metals Week publishes the following types of prices:
These prices, according to their source or method of calculation, may be further categorized as follows (examples in parentheses):
Exclusive Platt's Metals Week quotations are usually preceded by MW in the price description. Weekly averages of the quoted prices on the London Metal Exchange, the New York Mercantile Exchange's NYMEX/COMEX divisions also are published in Platt's Metals Week.Price descriptions usually refer to the source of the price, although they may also include references to the form or purity of the metal as well as to quantity and delivery information. Effective dates The fact that there are many types of prices makes it necessary to use three dating conventions: 1) the producer list price effective date, 2) the day the market was last surveyed, and 3) the day a price last changed. Producer prices usually carry effective dates. When more than one producer is involved, the date is the last time a producer price change affected the price published in Platt's Metals Week.The day the market was last surveyed is usually the next to last business day of the week. Most dealer prices and others that change frequently are dated in this manner. The day a price last changed is used for prices which do not have effective dates and which may change infrequently. It is also occasionally used with certain inactive dealer prices. Foreign exchange rates Five daily foreign exchange rates are published by Platt's Metals Week: the British Pound sterling (both spot and three-months), the Canadian Dollar (both spot and three-months), the London Metal Exchange sterling (both spot and three-months), the German Deutschemark, the Japanese Yen and the Malaysian Dollar. The British (spot), Canadian (spot), German, and Japanese exchange rates are the official noon buying rates as quoted by the New York Federal Reserve Bank. These rates are averaged to six decimal places on a weekly, monthly, and annual basis. The daily Malaysian exchange rate is the selling rate quoted by Citibank in New York. The British Pound Sterling spot exchange rate is used to convert Platt's Metals Week weekly prices into pounds sterling on a weekly basis and to convert several London prices into US dollars on a daily basis. When an exchange rate is not available (because of a US holiday which does not apply in London, for example) the previous day's exchange rate is used. This procedure minimizes fluctuations in the converted price. The Malaysian Dollar exchange rate is used to convert Malaysian tin prices into US dollars and to calculate the MW Composite tin price. Price ranges A weekly price may be quoted as a range to reflect either divergent pricing by competing producers and dealers or a week's dealer business. The bottom end of the range is used for calculating the monthlies in all cases except where the price is listed as a MEAN price. The double prices quoted on the London Metal Exchange are daily bid and asked prices. The arithmetic means of these are used to calculate weekly and monthly averages. High/low prices Most of the 'High' and 'Low' price listings which appear on the monthly and annual price pages of Metals Week apply to the quoted daily prices. Exceptions to this rule are: 1) for weekly prices, the high/low quotes are determined by the bottom of the weekly range if one exists; 2) for London Metal Exchange prices, the high/low applies to the daily bid/asked quotation; and 3) for monthly LME settlement prices (which are monthly averages of the applicable daily LME cash asked price), the high/low is the applicable monthly LME Settlement price. Futures trading positions The New York Mercantile Exchange's NYMEX/COMEX divisions quote constantly changing futures positions on several metals. Platt's Metals Week has selected convenient positions and reduced them to numerical designations (1st positions, 2nd position, eyc.). The actual trading months quoted are footnoted each week in Platt's Metals Week. The nearest (spot), three months, and approximate twelve months from spot positions are generally quoted. When trading months shift in the middle of a week, the quoted prices reflect the new trading month applicable to the numerical position designation. Calculation of averages There are three types of Platt's Metals Week averages: 1) those derived from daily prices, 2) those derived from weekly prices, and 3) those derived from monthly prices. 1) All prices quoted on a daily basis are arithmetically averaged to create weekly and monthly averages in the currency and units in which the prices originate. 2) In calculating monthly averages, prices quoted only on a weekly basis are considered to represent the full business week (beginning Monday) and therefore are weighted according to the number of business days in that week for which the New York Federal Reserve Bank published an exchange rate. For example, the monthly averages for March 1993 were based on four weeks with five business days and one week with three business days; the price quoted for each week is weighted by the number of business days in that week, and the total is divided by the number of business days in the month--in this case 21. Monthly averages of weekly prices in most cases use the low end of a price range, if one exists. The exceptions to this rule are prices that are listed as mean. The mean price is an average of the low and high end of a range. Platt's Metals Week reserves the right to drop a low quote at any time it becomes unrepresentative of the market. Because monthly averages must be available to industry on the first day of the following month, a discrepancy can result in the monthly average for prices set weekly when the month ends early in a given week. In such an instance, when a month ends on Monday, Tuesday, or Wednesday, the previous week's price applies to those days. If the month ends on Thursday or Friday, that week's price applies to the entire week. (In particularly volatile markets, Platt's Metals Week may set a given week's price earlier than usual to assure that the resulting monthly average more accurately reflects the market.) Weekly prices are intended to apply to the week as a whole, and producer effective dates are not taken into consideration in calculating monthly averages. This is done to minimize the problem of having arbitrarily to determine which of several producer effective dates should be applied. 3) Annual averages are arithmetic averages of monthly quotations in the currency and units in which the price originates. Conversion into other currencies The way a price is converted from one currency and measure of weight into another depends on whether the price is a daily, weekly, or monthly one. 1) Prices which originate as weekly quotations are converted into other currencies using the applicable exchange rates for the next to last business day of the week (usually Thursday). Monthly averages of weekly prices are converted into other currencies by using the published average monthly exchange rates, which reflect the New York Federal Reserve Bank business day schedule. 2) Weekly and monthly averages of daily prices are converted using an average of the daily exchange rates as they apply to each individual price. Because of differing holiday schedules from one country or industry to another, a number of different (unpublished) average exchange rates may be used to convert weekly and monthly averages of daily prices into other currencies. For any month in which there are no holidays, the published weekly and monthly average exchange rates are used to convert the daily prices into other currencies. 3) Annual averages are converted into other currencies using arithmetic averages of the published monthly exchange rates. It should be noted that only annual averages stated in the originating currency are true averages. The conversion of these averages into other currencies is accomplished using a single average annual exchanges rate. As a result, that conversion will not exactly agree with an annual average (which one might calculate for oneself) of monthly averages which are not stated in the originating currency. The same is true of monthly averages of prices which originate as weekly prices. |