PRICING NOTICE: Cobalt premiums – launch date, specification, methodology

Following the growth of the London Metal Exchange cobalt contract, Metal Bulletin is pleased to announce that from February 7 2014, we will publish premiums for three grades of cobalt.

In addition to current pricing, from this date, Metal Bulletin will begin publishing weekly London Metal Exchange premiums or discounts for the following grades on an in warehouse Rotterdam basis:

Ingots (including K1A and K1AY)

Cut cathodes/rounds (including Falconbridge, Vale Inco, Sumitomo Metal Mining, Jiangsu (KLK), Jinchuan)

These indexes, based on physical market trades gathered by MB, will show the dollar per tonne and dollar per lb premium or discount to the London Metal Exchange official cash cobalt ask price on the date of the deal.

Metal Bulletin’s cobalt premiums/discounts will be published at 2.30pm UK time every Friday, and will include all business transacted since the previous data collection was completed (at 12pm UK time).

Premiums/discounts will be calculated using Metal Bulletin’s premium index methodology.

The premium/discount calculations will be tonnage-weighted averages, based on transactions that have taken place in the physical cobalt metal market.

The full details of the transaction will be requested, including price, material specifications, transaction size, delivery point and terms, payment details and other factors which allow the underlying value of the transaction to be assessed.

For those deals with a significantly higher or lower price than the group, proof of price will be requested. If this is refused, the price will be excluded from the assessment.

Metal Bulletin will use its judgment and long experience to remove from the data set any prices or quotes which it believes to be incorrect or unrepresentative of the market.

In times of limited liquidity (when less than three confirmed sales are reported for a particular premium index), completed business will be combined with bids and offers from market participants, as well as assessments.

The tonnage weighting of any bid, offer, or assessment, will be set at the equivalent of 1 lot (1 tonne).

The use of both data collection routes allows continuity of pricing and accurate and up-to-date market quotes when physical activity falls.

If you have any comments on these specifications, or if you would like to contribute to Metal Bulletin’s cobalt premiums/discounts, please contact Fleur Ritzema at fritzema@metalbulletin.com.

Metal Bulletin would also like to invite any person active in the cobalt market to contribute to a six-month consultation period, which may result in changes to its spot international cobalt metal pricing process. Click here to find out more about this.

Please contact fritzema@metalbulletin.com for more information or to contribute your views to the consultation.

Fleur Ritzema 
fritzema@metalbulletin.com
Twitter: FleurRitzema_MB