Compilation Methodology of CIOPI

Alan Yang

Compilation Methodology of CIOPI




1,Composition of CIOPI


CIOPI are constituted by a comprehensive index and two sub indexes namely domestic iron ore price index and imported iron ore price index. On the basis of the calculation of domestic iron ore price index and imported iron ore price index, CIOPI is the weighted average according to the weight of the imported iron ore and domestic iron ore over the domestic pig iron output.


1.1, Domestic iron ore price index


Domestic iron ore price index includes


first, 62% iron content domestic price index;


second, 62% and 65% domestic iron ore price (ex factory dry RMB price with tax included)


Take the market price of domestic concentration in Apr, 1994 as 100 points, the index of the 62% domestic iron ore is calculated in comparison with the 100 points. The starting points and calculation method is in line with the present CSPI (China Steel Price Index) and the international steel products price of CRU.


1.2 Imported Iron ore price index


Imported iron ore price index includes:


1.2.1, 62% imported iron ore price


1.2.2, 62% direct import CIF price in USD


1.2.3, 62% import spot RMB price including tax


1.2.4, 58% direct import CIF price in USD


1.2.5, 58% import spot RMB price including tax


Take the market price of imported fines in Apr, 1994 as 100 points, the price index of the 62% domestic iron ore is calculated in comparison with the above 100 points. The starting points and calculation method is in line with the present CSPI (China Steel Price Index) and the international steel products price of CRU.


2, Compilation methodology of China Iron ore price index,


2.1, domestic price index


Sources:


The figures are collected via the domestic price information system of China Metallurgical Mining Enterprises Association. Based on the domestic iron ore output distribution and take into account the balance of administrative regions. the transaction domestic price including tax from 4 provinces and 32 mining areas are selected as the data base of domestic price index calculation. In 2014, the total output of the selected area made up 89.84% of the nation's total output.


2.2, methodology


2.2.1, weight coefficient,


The weight coefficient was based on the proportion of iron ore output of the provinces in the previous year over the total output. (Adjustment was made every February according to the output in the previous year)


2.2.2, sample


A, the standard of 65% domestic iron ore sample is as follows:


Iron content: 65%, range: 60%-67%


Humidity: 8%, range: 6-10%


Silicon dioxide: 5%, range: 4-6%


Alumina: 0.75%, range: 0.3-1.2%


Phosphorous: less than 0.03%


Sulphur:  less than 0.05%


PH value: acidity based, alkalinity converted into acidity


Granularity: over 70% within 0.074mm


Quantity: contracted volume of each transaction no less than 1000 tons


Place: ex factory price of 14 provinces and 32 mining areas


Payment: 100% in cash. Other ways of payment will be standardized as cash transaction


Unit of price assessment: RMB/ton with 17% value added tax


B, the standard sample of 62% domestic iron ore is the same as 65% content.


2.2.3, Price index compilation methodology:


The domestic dry concentration price with tax in the 14 provinces and 32 mining areas are converted into 65% content dry standard price with tax, according to which the domestic price are calculated by weigh average. The 65% price would not be converted into index.


The domestic dry concentration price with tax in the 14 provinces and 32 mining areas are converted into 62% content dry standard price with tax, according to which the domestic price are calculated by weigh average. The nation's weigh average price index takes the price in Apr, 1994 as 100 points to calculate domestic iron ore price index.


2.3, imported price index


2.3.1, Sources:


The basic data of imported iron ore price are sourced from:


2.3.1.1, the import price direct report system based on the direct import iron ore contract price collected by enterprises daily


2.3.1.2, the import price direct report system based on the direct import iron ore spot price collected by enterprises daily


2.3.1.3, price of the direct import iron ore assessed by experts group on every working day   (calculated by USD)


2.3.1.4, price of the direct import iron ore assessed by personnel in charge of information on every working day   (calculated by USD)


2.3.1.5. Import iron ore spot price assessed by expert group on every working day (calculated by RMB with tax)


2.3.1.6, import iron ore spot price assessed by personnel in charge of information on every working day (calculated by RMB with tax)


2.3.1.7, the closing price change of dominant contract of Dalian Commodity Exchange on that day


2.3.1.8, transaction price by the offer of CBMX platform on that day


2.3.1.9, transaction price by the offer of Global Ore on that day


2.3.2 Calculation Methodology


2.3.2.1, basic data


The basic data of Iron ore import price index consist 2 parts, contracted data and evaluated data.


Contracted data refers to firstly the price in USD of dry 62% and 58% exclusive of tax converted by the direct imported contract price, and the average CIF price was calculated by the weighed practical contract


Secondly the RMB price of 62% and 58% dry products converted by the imported contract price of the spot transaction, and the imported spot trade RMB price was calculated by the weighed practical contract


Thirdly the closing price change on every trading day of the import iron ore future dominant contract of Dalian Future Exchange


Fourthly the data reported by 30 experts and 79 liaison men from nationwide on every working day.


The comprehensive prices are calculated based on various proportions. Take the imported iron ore US price in Apr, 1994 as 100 points, the imported 62% Fe content iron ore CIF price was calculated for the imported iron ore price index.


The calculation of CIF USD price of 62% direct import iron ore and RMB price of the imported iron ore in spot trade are as follows:


First, convert all the contract data into 62% Fe content. The condition of screening is that the contract was signed on that day, and S,P, Al and Si was converted by the standard with the deduction of water and impurities.


Second , process the evaluation data submitted by the panels and researchers.


Third, collect the closing price data of Dalian Commodity Exchange, CBMX and Global Ore.


Fourth, based on the proportion, the 62% direct imported iron ore CIF USD price and imported iron ore spot trade RMB price with tax included are calculated via various data.


Fifth, based on the 62% Fe content domestic price and 62% direct imported iron ore CIR USD price, each index is calculated. China Iron Ore Price Index is comprehensively calculated based on the weight of each index.


The calculation of 58% Fe content direct imported iron ore USD CIF price and spot trade RMB price with tax included are likewise, but not included in the index calculation.


sample:


A, the standard of 62% direct imported CIF USD price is as follows:


Iron content: 62%, range: 60%-63.5%


Humidity: 8%


Silicon dioxide: 4.5%


Alumina:  2.00%


Phosphorous: 0.075%


Sulphur:  0.02%


Granularity: over 90% within 10mm


Quantity: contracted volume of each transaction no less than 35000 tons


Place: CIF price of Qingdao Port converted by the major port in China


Mode of ocean shipping: CFR (freight included) or CIF ( freight and premium included)


Sail schedule: within 2-4 weeks


Payment: 100% immediate payment. Other ways of payment will be standardized as cash transaction


Unit of price assessment: USD/ton without value added tax


B: The standard of imported iron ore spot trade RMB price with tax included are as follows:


Iron content: 62%, range: 60%-63.5%


Humidity: 8%


Silicon dioxide: 4.5%


Alumina:  2.00%


Phosphorous: 0.075%


Sulphur:  0.02%


Granularity: over 90% within 10mm


Quantity: contracted volume of each transaction no less than 10,000 tons


Place: CIF price of Qingdao Port converted by the major port in China


Payment: 100% immediate payment. Other ways of payment will be standardized as cash transaction


Unit of price assessment: yuan /ton without value added tax


C, USD CIF price of 58% direct imported low aluminum iron ore:


Iron content: 58%, range: 50%-60%


Humidity: 9.5 %


Silicon dioxide: 5.5%


Alumina:  1.5%


Phosphorous: 0.05%


Sulphur:  0.02%


Granularity: over 90% within 10mm


Quantity: contracted volume of each transaction no less than 35000 tons


Place: CIF price of Qingdao Port converted by the major port in China


Mode of ocean shipping: CFR (freight included) or CIF ( freight and premium included)


Sail schedule: within 2-4 weeks


Payment: 100% immediate payment. Other ways of payment will be standardized as cash transaction


Unit of price assessment: USD /ton without value added tax


D, 58% imported low aluminum iron ore spot trade RMB price with tax:


Iron content: 58%, range: 50%-60% (60% excluded)


Humidity: 9.5 %


Silicon dioxide: 5.5%


Alumina:  1.5%


Phosphorous: 0.05%


Sulphur:  0.02%


Granularity: over 90% within 10mm


Quantity: contracted volume of each transaction no less than 10,000tons


Place: CIF price of Qingdao Port converted by the major port in China


Payment: 100% immediate payment. Other ways of payment will be standardized as cash transaction


Unit of price assessment: yuan /ton including value added tax


3, Price weight:


Direct imported CIF USD price and imported spot trade RMB price with tax are calculated by the average weigh of the practical contract volume. Premiums will be calculated according to standard for the quality difference.


Illustration:


China Iron Ore Price Index Adaption Methodology is jointly released by CISA, CCCMC and MMACúČand iron ore price index office account for the explanation of the policy.