The launch of S&P Global Platts Japan oil price assessments - both for waterborne and rack - is a response to the domestic market's demand to move to open and clear assessments. In this video, Tokyo-based editors Anton Ferkov and Hiroyuki Koshoji explain the crucial role of Japanese companies in the establishment of this process through the Platts Market On Close (MOC) structure and the eWindow technology. They also provide a glimpse of the possible expansion of Platts Japan oil price assessment coverage.
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Watch this video in Japanese:プラッツジャパン石油製品アセスメントとイーウィンドウについて
Video Transcript
Platts Japan oil product assessments and eWindow explained
Hiroyuki Koshohi: Hello and welcome to this methodology video. I’m Hiroyuki Koshoji, editor for Japan oil products. Today, we’ll talk about Platts domestic Japan oil products waterborne and rack price assessments, and how you can play an active part in the establishment of open and transparent price assessments. To explain this further, I’m joined today by Anton Ferkov, senior managing editor for Japan oil products.
Hi Anton!
Anton Ferkov: Hi Hiroyuki!
H: So, we launched Platts Japan domestic oil waterborne assessments in April and rack assessments in December last year. Right now, we publish daily price assessments for: RON 89 Gasoline, Kerosene, Gasoil, high sulfur fuel oil A and low sulfur fuel oil A, all based on Japan Industry Standards specifications.
A: That’s right. For these products, there are three separate areas for loading covered for waterborne: Tokyo Bay, Chukyo and Hanshin. For rack, we have started with Chiba and Kanagawa.
Commentaries, assessments and market information are published in Japanese on a daily basis.
H: What’s next for Platts in Japan?
A: I’m glad you asked. This is really just the beginning of an incredible interesting journey. We are planning to expand waterborne assessments into the Ohnishi/Kikuma in the second quarter, and for rack we are planning assessments for Hanshin and Chukyo later in the year.
H: What is the process involved in these price assessments?
A: We use a structured process called Market On Close or MOC – where Platts gives clear priority to transparent bids, offers and transactions that are submitted for publication by market participants.
The MOC process assesses the value of a product at the end of the markets that we cover. For Rack the MOC is between 1.30 and 2pm local time, and for Waterborne it’s 3.00-3.30pm.
H: How is MOC different from eWindow?
A: So again, the MOC is the process of gathering transparent information and testing that in a structured manner at the end of each day.
eWindow, meanwhile, is the major tool used to make the process run more smoothly. It allows us to collect higher volumes of data in a structured and speedy manner. eWindow is built on the technology from ICE, or the Intercontinental Exchange.
Introducing the eWindow for waterborne in September, after the launch of the assessment in April, had a huge impact on liquidity, as companies had the ability to post their own bids, offers and trades.
The eWindow was used in rack assessments on the same day it was launched back in December.
H: Who can trade on the Platts MOC and eWindow?
A: The Platts MOC is open to everybody, but there is a vetting process done by the Platts price group to verify that companies that join the MOC are able to trade with a substantial number of companies. There are no limitations on the size of a company – all companies are treated equal and all go through the same vetting process. Once a company is approved for the MOC, an announcement is made to the market.
H: You mentioned that the technology behind eWindow is from ICE. Does this mean the registration for eWindow is separate from Platts MOC?
A: That’s right. For ICE, a company needs to sign a separate agreement with the Intercontinental Exchange, which has an office in Tokyo. Platts in Japan regularly provides a free training for using eWindow.
Now, a company that has not signed up for eWindow, but has been approved for the Platts MOC, can still post bids, offers and conclude trades for the MOC by reaching out to a Platts editor in Tokyo directly. The editor can post MOC information on the company’s behalf.
H: Why is it important for companies to participate in the Platts MOC/eWindow?
A: The purpose for Platts of the MOC is to generate open and transparent information, tested in the market. Platts editors analyze the data to develop a time-specific price assessment. If more data points are available to Platts editors, the more helpful it will be to assess markets. The more companies come out actively with open and transparent bids, offers and trades, the better the quality of the gathered information will be. The Japan oil products market has been demanding to move to open and clear assessments, and companies have a crucial role to play in making that possible.
H: Thank you very much, Anton.
We’d be very happy to receive your feedback and answer any question you might have on our Japan oil products assessments. Please feel free to email us anytime at pl_tk_editorial@platts.com. We look forward to hearing from you. Thank you for watching.