S&P Global Platts

S&P Global Platts is a world-leading Price Reporting Agency (PRA) and the premier source of information and benchmark prices for the global energy markets and commodities sectors. Think of them as the ultimate authority on the price of everything from crude oil and natural gas to steel, petrochemicals, and sugar. They don't buy or sell these physical goods themselves. Instead, like a highly specialized financial journalist, their job is to survey the market, gather data on trades, bids, and offers, and then publish price “assessments.” These assessments are so widely trusted that they become the standard benchmark prices used by producers, consumers, and traders to price trillions of dollars worth of contracts around the world. As a division of S&P Global, Platts plays a critical, if often unseen, role in the functioning of the global economy.

Imagine trying to figure out the “true” price of a barrel of oil. It's not like a stock with a single, visible price on an exchange. Oil is traded all over the world, in different qualities, for delivery at different times. It's messy. This is where Platts steps in.

The core of Platts' work is price assessment. Their reporters and analysts are in constant contact with a network of traders, brokers, producers, and buyers. They collect a massive amount of transaction data throughout the day. Using a defined and published methodology—the most famous of which is their “Market-on-Close” (MOC) process—they analyze this data to determine the most representative market value for a specific commodity at a specific time and location. This assessed price then becomes the benchmark. For instance, the price of Brent Crude, the most important global oil benchmark, is determined by Platts. This single number influences the price you pay at the pump, the cost of air travel, and the profitability of the world's largest energy companies. Their work extends beyond the physical spot market to inform the pricing of complex financial derivatives as well.

For a value investor, who is dedicated to understanding a business from the ground up, the information Platts provides is pure gold. It’s not just abstract data; it’s the key to unlocking a deeper understanding of a company’s fundamental reality.

• Understanding a Company's Economics: How can you calculate the intrinsic value of an oil producer or a copper miner without knowing the price they get for their product? You can't. Platts' benchmark prices are the starting point for modeling a company's revenues and, ultimately, its future cash flows. It allows you to move beyond vague stories and analyze the cold, hard numbers that drive the business.
• Identifying an Economic Moat: Is a particular company a low-cost producer that can remain profitable even when commodity prices crash? Or does it produce a specialized product that allows it to charge a premium over the standard benchmark? Platts' data provides the baseline you need to assess a company's cost structure and pricing power, which are the cornerstones of a durable competitive advantage.
• Informing Your Macro View: While value investors focus on individual companies, no company is an island. Commodity prices are a powerful indicator of global economic health, industrial activity, and inflationary pressures. Following Platts' reporting can help you understand the macroeconomic environment in which your portfolio companies operate.

The immense influence wielded by Platts and other PRAs has not gone without notice. Their power to set benchmarks that guide entire industries has, at times, attracted scrutiny from regulators concerned about transparency and the potential for market manipulation. While Platts makes its methodologies public, the process can still feel like a “black box” to outsiders. Despite these critiques, for any serious investor looking to analyze companies in the energy, metals, or agricultural sectors, S&P Global Platts is an indispensable resource. It provides the essential language of prices needed to translate the chaotic world of commodities into actionable investment insights.