Extension of the consultation period for the launch of European aluminium low-carbon differentials for VAP: pricing notice

The original consultation notice can be found here.

All aluminium VAP markets (wire rod, billet, primary foundry alloy and slab) are currently assessed within one low-carbon differential.

This is the MB-AL-0382 aluminium low-carbon differential value-added product, Europe, $/tonne, which has a three-month timing window.

The initial proposal was to separate low-carbon aluminium billet from the other VAPs, and to launch two new differentials — one for billet, with a three-month timing window, and a second for the remaining products, with a 12-month timing window.

However, following initial feedback, Fastmarkets now proposes to launch three new low-carbon VAP differentials in Europe to replace the existing one.

This would amount to a standalone low-carbon differential for primary foundry alloy with a three-month timing window, a standalone low-carbon differential for billet with a three-month timing window, and a third low-carbon differential for wire rod and slab with a 12-month timing window.

The differentials for billet and PFA would be assessed and published monthly, while the differential for wire rod and slab would be assessed and published on a quarterly basis.

This reflects the different trading mechanisms in the respective markets, with some better suited to shorter spot basis transactions and others to longer term agreements. These changes would allow for the inclusion of a wider range of data points, where some have previously had to be discarded due to the shorter timing window.

The revised proposed specifications are:
Aluminium low-carbon differential billet, Europe, $/tonne
Carbon limit: 4tCO2e per tonne of aluminium produced, Scope 1 and 2 emissions.
Type: Billet
Quantity: Min 100 tonnes
Location: Europe
Unit: USD/tonne
Timing: Within three months
Publication: Monthly, first Friday of the month, 4pm London
Notes: No other value-added products

Aluminium low-carbon differential primary foundry alloy, Europe, $/tonne
Carbon limit: 4tCO2e per tonne of aluminium produced, Scope 1 and 2 emissions.
Type:Primary Foundry Alloy
Quantity: Min 100 tonnes
Location: Europe
Unit: USD/tonne
Timing: Within three months
Publication: Monthly, first Friday of the month, 4pm London
Notes: No other value-added products

Aluminium low-carbon differential wire rod & slab, Europe, $/tonne
Carbon limit: 4tCO2e per tonne of aluminium produced, Scope 1 and 2 emissions.
Type: Wire rod, Slab
Quantity: Min 100 tonnes
Location: Europe
Unit: USD/tonne
Timing: Within 12 months
Publication: Quarterly, first Friday of the quarter, 4pm London
Notes: No billet or PFA.

These prices are a part of the Fastmarkets base metals package.

If these revised new differentials were to launch following the consultation, it would result in the discontinuation of the existing MB-AL-0382 Aluminium low-carbon differential value added product (VAP), Europe, $/tonne.

The historical data for this differential would remain available on the dashboard for a period of time.

The proposed changes will also impact the calculation of some inferred prices, which are calculated using the midpoint of the underlying premium and the midpoint of the low-carbon aluminium differential.

This would be replaced with the midpoint of the new low-carbon aluminium billet differential, if launched.

The affected inferred prices are:
MB-AL-0379 Aluminium 6063 extrusion billet premium, ddp Italy (Brescia region), inferred low-carbon mid-point, $/tonne
MB-AL-0380 Aluminium 6063 extrusion billet premium, ddp North Germany (Ruhr region), inferred low-carbon midpoint, $/tonne

There would be also two new inferred low carbon prices with the launch of the standalone primary foundry alloy differential:
Aluminium foundry alloy silicon 7 ingot premium, ddp Germany, inferred low-carbon midpoint, $/ tonne
Aluminium primary foundry alloy silicon 7 ingot premium, ddp Eastern Europe, inferred low-carbon midpoint, $/tonne

The proposed changes in this consultation do not impact the MB-AL-0381 aluminium low-carbon differential P1020A, Europe, $/tonne, nor would it impact the P1020A inferred prices, MB-AL-0377 aluminium P1020A premium, in-whs dup Rotterdam, inferred low-carbon midpoint, $/tonne and MB-AL-0378 aluminium P1020A premium, in-whs dp Rotterdam, inferred low-carbon midpoint, $/tonne.

The extended consultation period for this proposed launch starts from Thursday November 2 and will now end on Thursday November 16. The launch will then take place, subject to market feedback, on Friday December 1 for the monthly billet and PFA assessments, and January 5 for the quarterly wire rod and slab assessments.

As part of the initial consultation, Fastmarkets sought feedback on the current carbon limit of 4tCO2e per tonne of aluminium produced, under Scope 1 and 2 emissions, and has decided to maintain these parameters for its differentials.

To provide feedback on this price or if you would like to provide price information by becoming a data submitter to this price, please contact Carrie Bone/Imogen Dudman by email at: pricing@fastmarkets.com. Please add the subject heading “FAO: Carrie Bone/Imogen Dudman re: Aluminium low-carbon differentials.”

Please indicate if comments are confidential. Fastmarkets will consider all comments received and will make comments not marked as confidential available upon request.

To see all Fastmarkets pricing methodology and specification documents, go to https://www.fastmarkets.com/methodology.