I was thinking…always a bad thing…about discounts from index pricing for ferroalloys. I know why they started…the base price was unrealistically high and large financially secure buyers unwilling to pay the same price as small financially suspect buyers. (One large manganese alloy buyer reportedly has a contract with a major seller for DOUBLE the ‘normal’ discounts.) Also the discounts reflected payment and logistical differences.
Why? The LME price isn’t discounted? Instead of discounts why aren’t their variable PREMIUMS?
Of course the underlying price will have to be reflective of the actual market and be dynamic.
PREMIUMS also have a positive psychological effect on the market and they give buyers and sellers the same market flexibility that exists today.
It could happen but that would take a change in mindset. You can be sure I will be thinking about this more in coming days.