Pricing Principals
Professional Market Analysts: Only professional market analysts are qualified to provide reliable, continual and consistent pricing judgment. Others, such as reporters or editors, without professional knowledge and skills, are not capable of interpreting the essence of the market dynamics with an in-depth and accurate understanding.
Direct Phone Communication: The most effective and efficient method of investigating market prices is to directly call customers. Unlike passive or static communications, including the writing of letters, emails, speaking with customers enables market analysts to directly discuss, clarify and verify all possible factors affecting prices. In reality, the price information directly obtained from inquired customers tends to deviate from the truth.
Plenty of Customers: Any accurate pricing judgment shall rely on interviews with a large enough number of market participants, without which, a pricing judgment would be inaccurate or unreliable. Some other price reporters, who have never called customers for or inquired customers of prices, are not qualified to give correct price guidance.
Active Customers: The price sources shall be currently active in inquiring, buying or selling in the spot market. Customers without active inquiries, offers or transactions can hardly give credible price references.
Intelligent Pricing Judgment: The pricing matrix is far beyond a mere calculation of a collection of price data, but an intelligent judgment based on inquiries, evaluations and verifications of a full set of data, with weights adjusted according to specific trade terms.
Displaying Price Sources: By reporting and updating market news daily and frequently to customers, market analysts demonstrate that all our pricing judgments come from diligent investigation from a large pool of active market participants executing real transactions. Some other price reporters, who don’t write or post a piece of market news in weeks, can hardly be trusted to give credible price guidance.
Customer the Ultimate Judge: No matter how market prices are assessed, the customer is the ultimate judge who finally examines the accuracy of any reporters’ pricing, as market prices are collected from and to serve customers. While accurate pricing judgments win customers’ respect, inaccurate pricing judgments lose customers’ trust.
Price Collection
Price Collectors: Only professional market analysts, rather than reporters or editors, are qualified as industry professionals capable of collecting price information from complicated markets.
Deep Background: Market analysts shall possess extensive and in-depth industry knowledge and deep comprehension of key components and dynamics of the market rather than some specious and shallow views.
Rich Experience: Market analysts shall have years of industrial experience with exposure to times of price ups and downs as well as booms and busts of some industries.
Reliable Relationship: Market analysts shall have strong connections with industrial customers so as to be able to quickly and effectively obtain the most current and critical industrial information from the most credible sources.
Acute Insight: Market analysts shall have acute insight to identify the real price level from great volumes of false or specious price information provided by sources.
Continuity and Consistency: Market analysts shall adhere to a continual and consistent pricing matrix to make sure all market participants and price factors are appropriately weighted and the final pricing is continual and consistent.
Price Sources: The price sources shall cover the most critical three parties, producers, consumers and traders, modestly referring to exchanges and government bid platforms.
Producers: The producer is the defender of the market bottom price and the most efficient price source. Producers’ prices are easy to obtain, continual, consistent and reliable.
Consumers: The consumer is the terminator of the market top price and the most critical price source. Consumers’ prices are difficult to obtain, secretive, sensitive and scattered.
Traders: The trader is the amplifier of the market price signal and the most sensitive price source. Traders’ prices are easy to obtain, quick, timely but washy.
Exchanges: Manipulated mainly by financial speculators, exchanges’ prices, most of the time, do not effectively reflect the real prices formed by actual demand and supply in the spot market. Exchanges' prices are only for reference.
Governments: Occasionally and randomly, governments might invite tenders for stocks and the final bid prices often come out of special terms and conditions. Their prices are only for reference.
Price Conditions: Shall be prices of deals just closed, being closed or under negotiation in the spot market.
Active Customers: Active customers’ prices are the most updated and representative, with very high value for reference.
Deals Just Closed: The latest transaction prices after rounds of hard negotiations are the most valuable market price references.
Deals Being Closed: The negotiation is ending with most of the price terms settled by both parties after rounds of attack and defense. Likewise, such prices are the highly valuable market price references.
Deals under Negotiation: The negotiation is still underway in heated debate, but both parties’ prices strongly indicate the direction of the market trend.
Sourcing Methods: Shall be direct phone communication. Any others, including faxes, emails, SMS, chat tools, etc., are not efficient or reliable, at most for reference.
Phone Communication: The direct phone call is the only reliable and credible method to inquire, evaluate and verify the real market prices from multitudes of false information.
Faxed Contracts: The faxed contract is worthy of reference, but the authenticity must be guaranteed, as if not, it is not only useless, but misleading.
Emails: Without effective binding obligations and moral constraints, the prices indicated in emails received from customers have very low reference value, as the quality can hardly be guaranteed.
Chat Tools: Without effective binding obligation and moral constraints, the prices indicated in chat tools are very casual and emotional, with very low reference value.
Sample Standard: Market analysts shall balance the weighted factors of the inquired customers by the number, type, size, region, etc., each of which influences the pricing.
Number of Customers: Market analysts shall obtain effective prices from at least three non-affiliated customers, the more the better.
Diversity of Customers: Market analysts shall obtain effective prices from customers of at least three categories, producers, consumers and traders, the more the better.
Size of Customers: Market analysts shall obtain effective prices from customers of different sizes, large, medium and small ones, with weighted parameters accounted.
Region of Customers: Market analysts shall obtain effective prices from customers geographically representative, with weights appropriately adjusted on non-typical regions.
No One Tells Truth: Market analysts shall operate under the hypothetical premise that no one tells the truth, so they must argue and deduce to sort the true from the false.
Unwilling to Disclose: Some customers are just unwilling to talk about prices for some concerns or restricted by business interests, so market analysts must go able and beyond to get price information and verify with other related parties.
Unable to Disclose: Some unofficial stipulations or regulations might restrict customers from disclosing sensitive information to the public, so market analysts need special channels or connections to touch the truth.
Casual Offer: Some customers might very casually give a price, which could be very washy and/or fake, so market analysts must carefully scrutinize the figures, analyze, argue and deduce to determine the true.
Intentionally Misleading: Some customers might intentionally mislead by providing false information to misrepresent the market and gain an advantage, so market analysts must examine and inspect the given figures with great caution.
Price Elements
Transaction Price: Shall be the transaction price, rather than the offer price or inquiry price as the only basis for our pricing judgment. This point significantly differentiates us from other price reporters, and is the reason why our pricing is very accurate, very close to the real market, and holds a narrow range.
Spot Price: Shall be the price of current and one-time deals in the spot market with the most recent shipment date, rather than the price of deals made in the past, with long term and multiple shipments, or with one shipment but in the distant future. The later could deviate significantly from the current real market level, and should be accounted only after special background factors are eliminated, unless they are representative in a particular industry, in which customers don’t buy or sell in spot market.
Transaction Frequency: Shall be the price of deals reached randomly, in large number and in high frequency, rather than the price of deals concluded occasionally, in small number or without repeatability. The later could deviate significantly from the market mainstream.
Transaction Volume: Shall be the price of deals with typical and representative volumes, rather than deals with too small or too large volumes. The price for a volume deviating too much from the prevailing one could be significantly low or extraordinarily high, with very low reference value to define a mainstream price.
Payment Term: Shall be the price of deals with typical and representative payment terms, as the capital has a time cost, the longer the payment term, the higher the transaction price, and vice versa. The price for a too long or too short payment term might deviate significantly from the market mainstream.
Price Term: Shall be the price of deals with typical and representative price terms. The price for different price terms, EXW, FOB, CNF, DDP, and so on, might vary significantly.
Shipment Time: Shall be the price of deals with a prompt, most recent or recent shipment date. The price for a shipment date beyond one month or even months later reflects only dealmakers' expectation or judgment for the future market, rather than the current one.
Storage Location: Shall be the price of deals with typical and representative storage locations for goods. Different storage locations bring different transportation costs, time costs, chance costs and risk preference, so the prices vary accordingly.
Delivery Location: Shall be the price of deals with typical and representative delivery locations for goods. Different delivery locations bring different transportation cost, time cost, chance cost and risk preference, so the prices vary accordingly.
Grades and Impurities: Shall be the price of deals of prevailing grade, impurities, size and package. Otherwise, the prices could vary significantly.
Deal Makers: Shall be the price of deals made by continual, stable and active customers, rather than by those who make deals occasionally or come into the market from time to time. Otherwise, the prices could vary significantly.
Deal Background: Shall be the price of deals made by principal parties, independently and in free competition, not affiliated, related or specially arranged. Otherwise, the prices relate little to the market mainstream.
Offer Price: Sellers always offer higher prices, always want to sell at higher prices, and always naturally regard any inquirer a potential buyer. Market analysts shall argue over and verify the offer prices to surmise their real prices, which can be referred to as the high end of the price range.
Inquiry Price: Buyers always bid lower prices, always want to buy at lower prices, and always naturally regard any inquirer a potential seller. Market analysts shall argue over and verify the inquiry prices to surmise their real prices, which can be referred to as the low end of the price range.
Counteroffer Price: Out of rounds of negotiation upon the initial offer or inquiry, the counteroffer prices predict approximate figures for the final deal price and have greater value for pricing judgment.
Bottom Price: The bottom prices, lower or higher than which either sellers or buyers claim they won’t deal, stand very close to the final transaction prices, but there is still room for further negotiation.
Commentary Price: Industrial customers, who often exchange views with or collect market information from each other, could give insightful and straightforward price comments or discoveries. The commentary prices have relatively higher value for reference.
Matching Price: Just like lifting a finger, market analysts from time to time match some deals for customers who are urgent to sell or buy, on price terms, payment terms, delivery terms, etc. By doing so, market analysts more deeply understand the sellers’ and buyers’ current expectations and speculations and can more accurately grasp the real market price level.
Bid Price: Opened by governments or large corporations, the bid prices attract customers’ attentions to a high degree, but their actual influence on the spot market varies in different industries, only worthy of reference.
Exchange Price: The influence of the Exchanges' prices on the spot market varies in different industries, but all with reference value.
Relevant Product Price: There are relatively stable price gaps among different products of a category or different specifications of a same product, so market analysts could deduce or determine prices by observing a relevant product's prices.
Market Mentality: Market mentality, rather than the actual supply and demand, determines the market direction in the short term, so market analysts could give a very accurate prediction for the short term price movement by surmising market participants' current mentalities, while also closely observing the spot market transactions.
Market Vacuum: When the market hovers in a low level or consolidates in a high level or right after new policies or tariff adjustments, very few or even no transactions are concluded, as sellers or buyers tend to hold from the spot market, watching, surmising or testing the other sides' reactions and bottom lines. We will discuss with market participants to argue and speculate the other sides' intent or bottom prices, with typical questions like “what do you think would be the most reasonable price for the other side to accept”, and then give the most possible transaction price ranges by synthesizing their opinions.
Price Range
The fierce market competition restricts the majority of transaction prices to within a relatively narrow range. We give a low end and a high end to define the price range and to ensure its operability and repeatability.
Not Too Wide: The price range shall not be too wide. While a seller always tends to sell at the highest possible price, a buyer always tends to buy at the lowest one. Unless goods conditions or transaction terms vary significantly, the fierce competition would define the prices in a narrow range, in which most deals are concluded and anyone is able to sell out or buy in. Some other price reporters neither verify the prices of different grades, conditions and terms, nor collect sufficient price information, but simply put scattered numbers together, yielding distant price ranges, which are ultimately wrong and completely neglect thousands of sales or purchasing professionals' dedication and diligence.
Not Too Narrow: The price range shall not be too narrow. Transaction prices are always different from each other due to too many varying market factors, so if a price range is overly narrow, it could be unrepresentative, and thus weaken its operability and repeatability.
Covering Majority: The price range shall cover 60-80% of transactions in a market, not lower than 60% for a very active market with high volatility, and not higher than 80% for a very quiet market with low volatility.
Overlapping Midlines: The midline of a price range shall overlap with that of actual market prices, regardless of how small or large the actual price fluctuation band.
Reasonable Size: Based on 20 years' observation and practices, we think that, for the majority metal products in most of cases, a 3-5% price range shall be fairly reasonable, as it is not only sensitive enough to reflect market changes but also effective enough to help customers position themselves in the market. Some other price reporters give price ranges as wide as beyond 10%, or even 20%, which, we believe, is inappropriate, as it is usually impossible for the price of the same product with the same conditions and terms to vary so widely in a price range. Moreover, such a price bandwidth is too large to reflect market changes in a timely manner, as rounds of price ups and downs can happen in months but still hold within the range. It can make customers puzzled in determining a market mainstream when facing so wide a price range.
Attention to Practices: Based on market sizes, market volatility and industrial practices, we will adjust the criteria of price ranges accordingly to fit well with different industries.
Price Safeguards
It's never been easy to give accurate pricing, which not only guides customers' transactions but is also subject to customers' supervision. It is unrealistic to give any accurate pricing if a price reporter has no sufficient human and material resources, reliable technology and credible methodology, deep understanding of market dynamics and effective internal supervision.
Review and Rethink: During the daily market investigation, market analysts regularly mention prices a customer revealed last time for a second review just to double check the authenticity, and meanwhile improve our judgment method upon a specific customer based on its inclination and traits. We repeat the process and ceaselessly optimize the judgment method on every individual customer.
Phone Records: During the daily market investigation, market analysts record all communications with customers into the CRM. Supervisors are able to sample any record at random for examination and verification.
Writing News: After the daily market investigation, market analysts write and post market news to our website, quoting lots of statistics and key points collected from the market but with the privacy protected. The news clearly demonstrates to the public the evidence of our price judgment and transparency of our judgment process.
Diversified Customers: By reading news written and posted by market analysts on our website, diversified customers from all over the world, including producers, consumers, traders, and so on, are able to examine and verify our pricing, from the evidence to the conclusion, all transparent and all monitored. If incorrect, customers will vote with their feet.
Face up to Question: With sound respect and wide recognition, our market analysts maintain very close and solid working connections with industrial customers, who usually very directly put forward any discrepancies or concerns if they have, and right upon any such questions, we will review, discuss and verify the relevant information, and improve the pricing immediately if necessary.
Complaint Mechanism: In case a customer objects to or disagrees with our pricing or has any other related issues or concerns, complaints are welcome. Customers can call or email us their complaints and our specialists will record and forward the complaints to management. Customers will receive feedback within the promised deadlines.
Compliance Review: To ensure strict compliance with company policies and regulations, thee compliance officer routinely samples market analysts' working records, inspects and analyzes the relationship and rationality between collected information and concluded pricing, and then gives instructions on specific questions, to ensure company policies and regulations are strictly complied with.
Regular Adjustment: At least once a year, we regularly review and inspect the compatibility between the pricing parameters and industrial practices, and adjust some outdated pricing factors, or even suspend some price updating, in order to ensure the prices are the real reflection of the current market and serve customers' interests.
Internal Training: We routinely edit systematic and complete criterion handbooks for information collecting, writing, analyzing and pricing, train market analysts with necessary knowledge in industrial background, market background, customer psychology, trading behavior, trading terms, price terms, payment terms, etc., and illustrate the theories with concrete examples in practices, to help them cultivate a deeper understanding and make accurate and reliable price judgments.
Mentorship: New analysts shall be mentored by assigned senior market analysts, who train the new analysts with necessary knowledge, give them theoretical instructions, monitor their daily work in practical markets and ensure all company policies and regulations are gradually and strictly complied with.
Trial Pricing：New analysts shall begin with a period of trial pricing, which occurs parallel to the official pricing maintained by a senior analyst, who shall every time analyze and evaluate the new analysts' conclusions and evidence, providing necessary instructions and advice to ensure the compliance, until the new analysts fully grasp company policies on pricing and are able to judge prices independently.
