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Q&A
Foreign Trade Enterprise
Q: Due to the cash flow stress, I have a batch of goods to sell as soon as possible. But now, the market is not particularly optimistic, and the prices decline continuously. The buying interest from clients is low, and the clients are worried that prices may decline further after signing contracts. In this case, how do we handle the problems?
A: You can communicate and negotiate with your clients, and you can regard SCI price assessment as the settlement price or reference price. It is uncertain whether the prices will continue to drop or rebound against the changing market environment. SCI price assessment is able to timely reflect the true status of the market. The losses from sellers and buyers can be avoided and your goods can be sold in time.
Manufacturing Enterprise
Q: We usually buy a certain amount of feedstock every month, but we need to bargain with the suppliers every time, resulting in the low working efficiency. We intend to sign long-term contracts with some feedstock suppliers. But whose prices should be used as a reference, so as to make both parties feel fair and reasonable?
A: You can use SCI price assessment as the settlement price or reference price of the contract price, and write SCI price assessment into the calculation formula of the contract price. SCI price assessment can reflect the true market dealing price or price range. Regardless of the market fluctuation, SCI price assessment can reflect the market’s actual changes. Buyers and sellers can avoid the losses to the greatest extent by adopting SCI price assessment.
Newly-Constructed Factory
Q: Our company is about to put the units into production, but we have no idea about the price range acceptable to the market. If the products are supplied into markets, how do we determine the selling prices with distributers?
A: You can select one or several SCI price assessments related to your products, identifying a pricing model or weight with your distributers, as a reference for the selling prices of your new products. In this way, regardless of the market price fluctuation, SCI price assessment can provide important basis for you to adjust the selling prices, guarantee the profits for you and your clients, and help you establish long-term and stable cooperation with clients.
Bank
Q: Our bank often receive the demand for mortgage loans. Collaterals can sometimes be bulk commodity feedstock. But we are not sure whether the mortgage prices are reasonable.
A: SCI can provide you with the commodity price assessment or a few assessment combinations related to this commodity as a price reference. These assessments can be used as proof of prices for the assessment of corporate assets.
Government Agency
Q: We need to understand the real market prices of commodities in order to better understand the commodity market; to develop reasonable and scientific control policies for the healthy and orderly development of the market, and to provide scientific basis for the government departments at all levels to formulate appropriate policies.
A: SCI price assessment is based on the obtainable prices or the extent of the dealing prices of the particular commodity. It is capable to truly reflect the market price levels, and it avoids the possibilities of the pricing interruption such as when certain distributors fail to report prices due to the supply shortage. Governments and organizations can understand the market tendency better by using SCI price assessment, which provides a more scientific and reasonable reference or basis for macro-policy making.
Other Relevant Questions
Q1: How will SCI ensure the neutral principle rather than being manipulated by individual participants?
A1: As the leader of China’s bulk commodity information service providers, SCI enacts rigorous SCI Commercial Moral Regulation and SCI Code of Conduct for Analyst and implements methodology strictly in the price assessment. While assessing prices, SCI requests that analysts shall not only collect prices from the sellers and buyers of transactions, but also verify the information authenticity via multi channels. For those collected values not obeying the methodology or the mainstream market tendency, SCI will not include into the price assessment.
Q2: Participants usually seek to manipulate prices with particular intention, will those manipulated prices be included into the price assessment of SCI?
A2: According to the regulation in the compliance policy and methodology of the price assessment system, collected prices been diverse from the mainstream market tendency will not be included into the price assessment of SCI. SCI mostly applies the universal dealing prices into the assessment, and the bid/offer prices are only took as references in extreme circumstances.
Q3: How will SCI assess prices in extreme market circumstances when there is no deal concluded?
A3: If the extreme market circumstances occur in the assessment time period or window when no available concluded dealing price is collected under the terms of the methodology, SCI will gather the favorite price extent of both sellers and buyers and the offer and bid in the negotiation, then the price assessment will be made based on the most possible price extent.
Q4: Will dealing prices provided by me as a market participant be used by SCI?
A4: SCI has settled strict standard of each assessment in the price assessment methodology and has made specific requests on region, time, quantity of goods, payment methods, arrival time and so on. If the dealing price you provide is in accordance with methodological requirements of methodology, SCI will adopt your price as a basis for the assessment. Otherwise, your price will not be adopted.
Q5: Are there any differences between SCI’s assessment and prices provided by other China’s information institutions?
A5: Yes, there are differences. Strictly according to methodological requirements, SCI mainly collects dealing prices and takes price assessment to obtain the price or price range that reflect authentic market situations. SCI infuses the research conclusion into the various commodity price assessment methodology, based on years of research on the formation mechanism and driving forces of the commodity price, to strive to assess objective and scientific results. Currently, prices of most information institutions have not been supported by methodology.
Q6: Can the price assessment methodology be explained if we want to use SCI assessments to sign long-term contracts with customers?
A6: You can download the methodology freely from SCI website or contact with your customer service representative. For details on the price assessment process or other related questions, you can call on +86-533-6296499 to consult SCI Price Assessment Methodology Committee at any time. SCI will make applicability consultation periodically, and each market participant can put forward reasonable suggestions for the methodology.
Q7: What to do if there is no price assessment for the area that I pay attention to?
A7: Not all the commodities or areas are suitable for the price assessment. Only the price assessment in the market which is representative and active in trading is meaningful. You can use the assessment in other areas for your reference or benchmark price and apply it with a premium of discount according to actual situations.
Q8: Will the SCI price assessment methodology be updated with the market changes? How can we get the update?
A8: With many years of deep tracking study on the pricing mechanism and driving forces of each commodity, SCI integrates the study conclusions into the price assessment methodology to seek for objective and scientific assessment results. The price driving forces of each commodity will change constantly with the formation of time and space. Accordingly, the price assessment methodology of each commodity will be modified constantly. SCI will make applicability or unconventional consultations periodically to maintain the applicability and scientificity of the methodology. The consultation plan and modification scheme will be declared in SCI website.