Business continuity plans for CRU Prices

We are successfully implementing certain elements of our business continuity plans to both protect our people and maintain delivery of our price assessments and analysis.

We know that these are difficult times for everyone and therefore we would like to reiterate key elements of the plans as they relate to prices that are important to you.

People and index integrity

• All our global price analysts are working from home or are otherwise appropriately physically sheltered from exposure to Covid-19 by meeting or exceeding the guidelines established by relevant regional or national authorities.

• All our price analysts have appropriately trained and physically separated colleagues capable of assessing the same prices, in some cases located in another region or country.

• Individuals responsible for price administration and publication processes are also fully trained and backed up by additional personnel.

• Our price analysts are trained and have sufficient experience and expertise to apply expert judgement in price determination in rapidly changing and/or low liquidity market conditions.

Process resilience

• CRUs existing methodologies include mechanisms to deal with low market liquidity situations and maintain price integrity.

• Processes related to price determination are fully documented.

• Processes related to price administration are fully documented.

• Risks to business processes are identified and those which have the potential to cause unplanned interruptions to normal operations and/or the provision of normal service levels to external clients and stakeholders, including the provision of prices to all users, are controlled. This includes our response to Covid-19.

Infrastructure

• Our VPN services have been reviewed, upgraded and tested and are operating normally.

• CRU has strategic partners who are responsible for assisting with the delivery of such business continuity and disaster recovery services. These include cybersecurity and incident management, disaster recovery services, office space and Cloud services partners whose involvement may be called upon to ensure uninterrupted delivery of our prices.

• The Business Continuity Management Policy is tested on an annual basis in the form of a Disaster Recovery Test and a written review of the test is produced for the Price Governance Committee by the Compliance Lead.

US Midwest flat-rolled prices

• These prices are weekly, not daily. This supports their validity by maximising the opportunity to capture valid transactions, remove noise and scrutinise data submitted before index finalisation and publication.

• We have regular data providers who represent a number of mills of different types (EAF and blast furnace producers) and buyers both large and small.

• There are mechanisms to ensure that the price is representative of the market, even if market liquidity is low:

• The maximum volume weight given to any individual price submission is 30%, in order to limit to influence of any single submission.

• Expert judgement is used to set a range into which data points are expected to fall. Any outside this range are subject to additional scrutiny or follow-up.

• In the unprecedented event of zero submissions, or where all submissions were deemed inadmissible or otherwise where received data is judged insufficient, expert judgement would be used to determine the final benchmark value.

• This choice would be based on other price information such as bids and offers; observation of the previous week’s prices; short-term historical price trends; other quantitative market data including prices in other related active markets, producer price change announcements; qualitative information such as that received from interactions with market participants or other CRU analysts, and; other sources of information relevant to the spot market.

• The analyst will use their judgement to evaluate the volume, quality and coherence of any such market information they may possess. If one or more of these factors in combination does not provide a sufficiently clear indication of the direction and extent of market movement to allow the price analyst to positively change the benchmark from the previous value, the prior value would be rolled over to form the current period value.