World prices are prices at which large export-import operations are carried out, which quite fully characterize the state of international trade in a particular product. World prices change under the influence of market conditions. At the same time, changes in the value proportions of commodity exchange have a significant impact on the development of international trade, its commodity structure and results.
In modern practice of international trade, two types of basic prices are used: calculated and published.
Estimated prices are prices individually determined by exporting firms for specific types of industrial goods in accordance with various methods. Published prices are prices reported in special and branded sources of information (reference prices, exchange quotations, auction prices, bid prices, prices of actual transactions, etc.). They, as a rule, reflect the level of world prices.
The modern world market is characterized by the presence of a large number of different industry markets for goods and services, multiple prices. In practice, the price of a particular product of the same market can vary significantly. Therefore, when justifying, determining and agreeing on a foreign trade price, it is necessary to have a clear idea of the nature of the transaction, which dictates the peculiarity of the “selection” of the price:
use of prices of separate export and import operations; prices in cash payment terms; prices formed in ordinary commercial transactions.
Based on these assumptions, it is clear that the prices fixed within the framework of long-term interstate agreements will differ significantly from the prices in transactions, or from the prices of goods paid for through complex banking operations, under certain currency restrictions, etc.
Suppliers of goods to the foreign market meet with significant price fluctuations, the provision of various discounts, the application of surcharges. In addition, almost always the prices for similar products differ, because different suppliers supply goods of different quality, configuration, etc. A significant share of the final price is transportation costs.
In modern international trade, especially in the trade of commodities and semi-finished products, a prominent place is occupied by intermediary firms, which also have their profits as a result of sales. As for the trade in machine-technical products, technically complex goods, here prices, as a rule, are formed only with direct contact between the seller-producer and the buyer-consumer. At the same time, the price includes a variety of components – premiums for the warranty, pre-sale and after-sales service, packaging, etc.
To study and use in practice the price indicators of the world market, it is necessary to know the main sources of information about prices. Currently, special data banks have been created for almost all goods and product groups by region and time period (for seasonal goods). Huge opportunities are provided by the computer telecommunications system, which allows in a matter of minutes to get an orientation to almost all goods supplied to the world market. However, these will be indicative prices, allowing the exporter and importer to have a launching pad for negotiations on supply prices. The pricing mechanism remained the same: the analysis of supply and demand, the draft price, based on the situation on the market, and the formation of the contract price in the course of direct negotiations between the supplier and the buyer.
Information on the prices of world commodity markets is usually divided into several groups.
A contract price is a specific price negotiated between the seller and the buyer, which is usually lower than the supplier’s bid price. The contract price is valid for the entire period of the contract, unless it has been revised during the execution of deliveries. Contract prices are not published anywhere because they represent trade secrets. In principle, the contract prices for a certain product in a certain region and in the presence of a small circle of sellers and buyers are known. The practical task is to collect information and create a data bank.
Reference prices are the seller’s prices published in specialized publications, bulletins, as well as in periodicals, in newspapers, magazines, in computer information channels. The range of goods included in price charts mainly covers non-exchange commodities and semi-finished products (oil and petroleum products, ferrous metals, fertilizers, etc.). Currently, reference literature on prices for non-exchange goods has become very widespread. Thus, the exporter of petroleum products is guided by daily price quotations – commodity and regional – published in directories, which can be received daily through a computer communication system. However, it should be borne in mind that there is a certain gap between the prices published in reference books and the actual prices of transactions. As a rule, reference prices are somewhat inflated. Reference prices do not react quickly to changes in the conjuncture or to any political events, with the possible exception of oil prices , a very specific commodity. At the same time, they reflect the dynamics of prices in a given market and trends.
Exchange prices are the prices of goods that are traded on commodity exchanges. Commodities include mainly raw materials and semi-finished products. Commodity prices promptly reflect all changes occurring in the market of this commodity. The slightest changes in one direction or another of the market situation instantly affect the stock quotes. This is explained by the fact that the stock quotes themselves are the actual prices of transactions at the moment. It should be noted that exchange quotations do not reflect “in themselves” other instruments of international trade, such as: terms of delivery, payment, etc. There are certain regulations for the work of the exchange and participation in its work. Exchanges operate daily, and the quotation commission registers and publishes quotation prices in special bulletins. As practice shows, stock quotes, reacting quite sharply to various external “stimuli”, still cannot reflect the actual trends in price movements. Often, operations are carried out on exchanges that are frankly speculative in nature.
In international foreign trade practice, experts are guided by quotations of the most well-known, well-established exchanges with exceptionally highly qualified personnel, such as the London Metal Exchange (LME), the Chicago Board of Trade, which deals with quotations and sales of cereals, or the New York Cotton Exchange (NYCE – New York Cotton Exchange).
Auction prices – show the prices obtained as a result of bidding. These are real prices that reflect supply and demand in a given time period.
Statistical foreign trade prices – published in various national and international statistical directories. These prices appearing in such publications are determined by dividing the value of exports or imports by the volume of products purchased or delivered. These prices do not show the specific price of a particular product. From the point of view of their practical application, they are interesting for understanding the general dynamics of foreign trade of a particular country, for statistical calculations, they are used as an approximate benchmark.