The purpose of this note is to confirm that the price indices and average prices published following Trading Event 308 held on 17 May 2022 are correct.
A notable aspect of the summary results published by GDT following Trading Event 308 is that the GDT Price Index for WMP reports a fall of 4.9%, while the chart of the weighted-average WMP price shows a small increase (amounting to 0.5%).
This is because the GDT Price Index differs from the weighted-average prices in two ways: the price index adjusts for situations where a product has no comparator price in the previous Trading Event, and secondly, it applies a constant relative weighting (based on traded quantities) to price movements across adjacent Trading Events whereas the simpler weighted-average price does not make any adjustments. The basis for the price index adjustments is available on the GDT website here and in more detail here.
For Trading Event 308, bidders purchased a large quantity of WMP Instant on Contract Period 1 at $3,980 per MT, compared to the previous Trading Event where no WMP Instant was sold in that contract period. Therefore, no comparator price is available, leading the price index to estimate a replacement comparator price which, although valid, contributed to the 4.9% drop that was reported.
Note, if we excluded WMP Instant CP1 from the summary price measures for Trading Event 308, the GDT Price Index for WMP would have reported a fall of 3.0%, whereas the WMP weighted-average price would have increased by 0.4%. This difference between -3.0% and +0.4% reflects the bias in the weighted-average price that results from using actual traded quantities.