IDE U ARGUS METALS INTERNATIONAL Contents: Methodology overview 2 Market overview 6 Aluminium 7 Copper and brass 7 Copper TC/RC Index 7 Nickel lead and zinc 7 Nickel and zinc specifications 8 Minor metals 9 Electronic metals specifications 10 Battery metals specifications 12 Light metals specifications 14 Mineral sands specifications 18 High-temperature metals specifications 18 Minor metals scrap 22 Minor metals scrap specifications 23 Minor metals indexes 24 Platinum group metals 25 Ferro-alloys and feedstocks 26 Bulk alloy and feedstock specifications 27 Noble-alloy and feedstock specifications 31 OGY AND SPECIFICATIONS G AND SPECIFICATIONS OGY Nickel and stainless steel scrap specifications 34 L Ferro-alloys and feedstocks indexes 35 Rare earths 36 Rare earths specifications 37 Rare earths indexes 42 ETHODO LAST UPDATED: SEPTEMBER 2021 The most up-to-date Argus Metals International methodology is available on www.argusmedia.com M www.argusmedia.com 19 January 2005 METHODOLOGY AND SPECIFICatiONS GUIDE September 2021 Methodology overview • Other market information, to include spread values between grades, locations, timings, and many other data. Methodology rationale Argus strives to construct methodologies that reflect the way the In many markets, the relevant methodology will assign a relatively market trades. Argus aims to produce price assessments which are higher importance to transactions over bids and offers, and a reliable and representative indicators of commodity market values relatively higher importance to bids and offers over other market and are free from distortion. As a result, the specific currencies, information. Certain markets however will exist for which such a volume units, locations and other particulars of an assessment are hierarchy would produce unreliable and non-representative price as- determined by industry conventions. sessments, and so the methodology must assign a different relative importance in order to ensure the quality and integrity of the price In the base metals, minor metals, ferro-alloys and rare earths mar- assessment. And even in markets for which the hierarchy normally kets, Argus publishes physical market prices in the open market as applies, certain market situations will at times emerge for which the laid out in the specifications and methodology guide. Argus uses strict hierarchy would produce non-representative prices, requiring the trading period deemed by Argus to be most appropriate, in Argus to adapt in order to publish representative prices. consultation with industry, to capture market liquidity. In order to be included in the assessment process, deals must meet Verification of transaction data the minimum volume, delivery, timing and specification require- Reporters carefully analyse all data submitted to the price assess- ments in our methodology. In illiquid markets, and in other cases ment process. These data include transactions, bids, offers, vol- where deemed appropriate, Argus assesses the range within which umes, counterparties, specifications and any other information that product could have traded by applying a strict process outlined later contributes materially to the determination of price. This high level in this methodology. of care described applies regardless of the methodology employed. Specific to transactions, bids, and offers, reporters seek to verify the Survey process price, the volume, the specifications, location basis, and counter- Argus price assessments are informed by information received from party. In some transactional average methodologies, reporters also a wide cross section of market participants, including producers, con- examine the full array of transactions to match counterparties and sumers and intermediaries. Argus reporters engage with the industry arrive at a list of unique transactions. In some transactional average by proactively polling participants for market data. Argus will contact methodologies, full details of the transactions verified are published and accept market data from all credible market sources including electronically and are accessible by subscribers. The deals are also front and back office of market participants and brokers. Argus will also published in the daily report. receive market data from electronic trading platforms and directly from the back offices of market participants. Argus will accept market data Several tests are applied by reporters in all markets to transactional by telephone, instant messenger, email or other means. data to determine if it should be subjected to further scrutiny. If a transaction has been identified as failing such a test, it will receive Argus encourages all sources of market data to submit all market further scrutiny. For assessments used to settle derivatives and for data to which they are a party that falls within the Argus stated many other assessments, Argus has established internal proce- methodological criteria for the relevant assessment. Argus encour- dures that involve escalation of inquiry within the source’s company ages all sources of market data to submit transaction data from and escalating review within Argus management. Should this pro- back office functions. cess determine that a transaction should be excluded from the price assessment process, the supervising editor will initiate approval Throughout all markets, Argus is constantly seeking to increase and, if necessary, documentation procedures. the number of companies willing to provide market data. Report- ers are mentored and held accountable for expanding their pool Primary tests applied by reporters of contacts. The number of entities providing market data can vary • Transactions not transacted at arm’s length, including deals significantly from day to day based on market conditions. between related parties or affiliates. • Transaction prices that deviate significantly from the mean of For certain price assessments identified by local management, if more all transactions submitted for that day. than 50pc of the market data involved in arriving at a price assessment • Transaction prices that fall outside of the generally observed is sourced from a single party the supervising editor will engage in an lows and highs that operated throughout the trading day. analysis of the market data with the primary reporter to ensure that the • Transactions that are suspected to be a leg of another trans- quality and integrity of the assessment has not been affected. action or in some way contingent on an unknown transaction. • Single deal volumes that significantly exceed the typical trans- Market data usage action volume for that market. In each market, Argus uses the methodological approach deemed • Transaction details that are identified by other market par- to be the most reliable and representative for that market. Argus will ticipants as being for any reason potentially anomalous and utilise various types of market data in its methodologies, to include: perceived by Argus to be as such. • Transactions • Transaction details that are reported by one counterparty dif- • Bids and offers ferently than the other counterparty. 2 www.argusmedia.com 19 January 2005 METHODOLOGY AND SPECIFICatiONS GUIDE September 2021 • Any transaction details that appear to the reporter to be illogi- price series. The application of judgment is conducted jointly with cal or to stray from the norms of trading behaviour. This could the supervising editor, in order to be sure that guidelines below are include but is not limited to divergent specifications, unusual being followed. Valuation metrics include the following: delivery location and counterparties not typically seen. • Transactions that involve the same counterparties, the same Relative value transactions price and delivery dates are checked to see that they are Frequently transactions occur which instead of being an outright separate deals and not one deal duplicated in Argus records. purchase or sale of a single commodity, are instead exchanges of commodities. Such transactions allow reporters to value less liquid Secondary tests applied by editors for transactions markets against more liquid ones and establish a strong basis for identified for further scrutiny the exercise of judgment. • Exchange one commodity for a different commodity in the Transaction tests same market at a negotiated value. • The impact of linkage of the deal to possible other transac- • Exchange delivery dates for the same commodity at a negoti- tions such as contingent legs, exchanges, options, swaps, ated value. or other derivative instruments. This will include a review of • Exchange a commodity in one location for the same com- transactions in markets that the reporter may not be covering. modity at another location at a negotiated value. • The nature of disagreement between counterparties on trans- actional details. Bids and offers • The possibility that a deal is directly linked to an offsetting trans- If a sufficient number of bids and offers populate the market, then in action that is not publicly known, for example a “wash trade” most cases the highest bid and the lowest offer can be assumed to which has the purpose of influencing the published price. define the boundaries between which a deal could be transacted. • The impact of non-market factors on price or volume, includ- ing distressed delivery, credit issues, scheduling issues, Comparative metrics demurrage, or containment. • The relative values between compared commodities are read- ily discussed in the market and can be discovered