Pricing Policy for EN 590 10 PPM

Overview

This pricing policy establishes a flexible structure for determining the selling price of EN 590 10 PPM diesel fuel, based on prevailing Platts indices across key markets (Fujairah, Rotterdam, Jurong, and Arab Gulf). The policy incorporates a firm minimum floor price to protect profitability, while allowing for upside adjustments when market benchmarks rise. All prices are in USD per metric ton (USD/MT) and are determined on the date of delivery or inspection, as applicable. The policy distinguishes between downward and upward trends in Platts indices, with a threshold around USD 625-628/MT for triggering adjustments.

• Minimum Floor Price: Under no circumstances will the selling price fall below USD 598/MT.
• Basis for Adjustments: Prices are tied to relevant Platts indices minus a location-specific discount (in USD/MT, FOB basis). Discounts provide flexibility (e.g., 20, 25, 27, 30 USD/MT) to align with market conditions, buyer negotiations, or competitive dynamics.
  Price Indication in Commercial Invoice: FOB Fujairah 598 USD PMT
  NB: Minimum USD 598/MT*, subject to adjustment to the higher of USD 598/MT or Fujairah Platts minus USD 27/MT if Fujairah Platts exceeds USD 625/MT on the relevant date of inspection
  Terms: *The selling price shall not be lower than USD 598 per metric ton or Fujairah Platts minus USD 27 per metric ton. So the invoice is issued at the lowest base price as 598 USD PMT but if Fujairah Platts go up to the 625 USD benchmark then a higher rate will be considered at the day of the inspection and a new CI will be issued.
• Trend-Based Logic:
  • Downward Trend: If the relevant Platts index falls below or crosses less than USD 628/MT, the price defaults to the minimum of USD 598/MT.
  • Upward Trend: If the relevant Platts index exceeds or crosses higher than USD 628/MT, the price is set to Platts index minus the applicable discount.
• FOB vs. CIF: Prices are initially calculated on an FOB basis. For CIF deliveries, actual tanker freight costs will be added to the FOB rate.
• Determination Date: Prices are fixed based on the Platts index value on the date of delivery or inspection, ensuring alignment with real-time market fluctuations.

Location-Specific Pricing Formulas

The selling price shall be calculated as follows, selecting the higher of the minimum floor or the adjusted Platts value when applicable:

Example Calculations (Assuming Fujairah Platts for Illustration)

• Downward Trend Example: If Fujairah Platts = USD 620/MT (below USD 628/MT) and discount = 27, then Platts – 27 = USD 593/MT. Selling price defaults to USD 598/MT (higher than calculated value).

• Upward Trend Example: If Fujairah Platts = USD 650/MT (above USD 628/MT) and discount = 27, then Platts – 27 = USD 623/MT. Selling price = USD 623/MT (higher than USD 598/MT).

• Edge Case: If Fujairah Platts = USD 625/MT and discount = 30, then Platts – 30 = USD 595/MT. If threshold not exceeded, price = USD 598/MT.

Additional Clauses

• Invoice Issuance: Invoices will initially reflect the minimum base price of USD 598/MT. If the relevant Platts index rises above the threshold (e.g., > USD 625/MT for Fujairah), the higher adjusted rate will be applied retroactively or via amendment.

• Freight for CIF: Actual tanker freight rates (sourced from market quotes on the delivery date) will be added to the FOB price. No markups; freight is passed through at cost.

• Flexibility in Discounts: The discount (X) can be negotiated as 20, 25, 27, or 30 USD/MT for Fujairah to optimize deals. Lower discounts (e.g., 20 USD/MT) may apply in competitive markets like Jurong or Fujairah.

• Safeguards: This structure maximizes revenue by capturing upside from rising Platts while enforcing the floor to avoid sales below cost. All adjustments are subject to verification against official Platts publications.