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  MMAC，and iron ore price index office account for the explanation of the  policy.

Contact person:  Zhao Wei and Diao Li

Tel:  010-65131884, 15010935233

Email:  zhaowei177@163.com