Pannonia Ethanol, a Hungarian ethanol producer, led critics of Platts at a meeting in London, a month after the publisher was raided by the European Union in a probe into potential manipulation of oil and biofuels prices.
“A lot of people are not happy with Platts,” Mark Turley, president of Pannonia Ethanol, said from the front row at the Platts Ethanol Methodology Forum in London today. “I don’t see any transparency.”
The EU raided the offices of Platts and oil companies BP Plc (BP/), Royal Dutch Shell Plc (RDSA) and Statoil ASA (STL) starting on May 14 to investigate possible price manipulation and collusion by traders. Platts, owned by McGraw Hill Financial, said May 15 that it has provided data and is cooperating with the inquiry.
Pannonia said May 16 that it lodged a complaint late last year with EU antitrust regulators, saying Platts denied it the opportunity to contribute to the price assessments. Jorge Montepeque, Platts director of market reporting, said at the forum today that the company keeps its vetting of potential participants in price assessments private because it covers confidential or commercially sensitive information.
Traders voluntarily report bids, offers and trades to Platts through e-mails, instant messages and phone conversations in a defined window period each day, which are then used to create end-of-day price assessments for various commodities, including crude oil and ethanol. While companies are not obliged to report their deals, any participant that makes a bid or offer in the Platts window will have to fulfill the transaction if asked by a counterparty. Ethanol is blended into gasoline and sold in the spot market across Europe.
Platts looks at a candidate’s finances, creditors, its status with counterparties, and whether it has sufficient logistics to deliver products as part of the vetting process in determining which companies can participate in its windows, Montepeque said.
“You are regulator and judge at the same time,” Rob Vierhout, secretary-general of ePURE, the European renewable ethanol association, an industry group, said at the forum. “Where can we settle these disputes?” he asked.
Montepeque said Platts as a publisher needs to stay independent in its decisions and seeks to be “reasonable and responsible” without being influenced by third parties.
Turley said Pannonia has delivered shipments and made payments, and yet is still excluded from participating in Platts price assessments for ethanol.
“The more I look into it, the more I get confused,” he said at the forum. “I deal with most of the people in this room every day, they buy ethanol off me.”
The Platts ethanol forum, which was open to the public, had to be moved from the company’s London headquarters to a larger venue to accommodate more people. Platts said 56 people attended today.
Several participants also expressed concern that Platts assessments didn’t always reflect true prices, especially in the nascent and infrequently traded biofuel markets.
Arnold Kolin, Marckolsheim, France-based commercial director of biofuels at Tereos, said Platts assessments sometimes did not match the “real market.”
“We have a market with so few trades,” Markus Olsson, business manager of Lantmannen Agroetanol AB based in Hanholmsvagen, Sweden, said. “And if you just put in a quote, just from any source, without doing a check, you will be like any social forum. You have to go in and check what is actually quoted.”
Platts said it continuously cross-checks its reporting, corrects any mistakes and has procedures and a compliance department to deal with complaints. The company is committed to being “open to scrutiny,” and to making data public, said Simon Thorne, Platts global editorial director for agriculture and petrochemicals.
Bloomberg LP, the parent of Bloomberg News, competes with Platts and other companies in providing energy markets news and information.
To contact the reporters on this story: Konstantin Rozhnov in London at firstname.lastname@example.org; Lananh Nguyen in London at email@example.com
To contact the editor responsible for this story: Stephen Voss at firstname.lastname@example.org