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Metal Bulletin has made changes to its pricing methodology for both its spot and quarterly aluminium P1020 cif main Japanese ports (MJP) premiums, effective March 23.
The amendments follow a one-month consultation period.
Aluminium P1020 cif quarterly main Japanese ports (MJP) premium Metal Bulletin has updated the methodology to include confirmed deals from at least one major consumer (instead of two consumers previously) and confirmed deals with traders.
This change reflects the increasing volumes of deals taking place between traders and producers for the settling of this benchmark. The methodology will continue to be considered settled if deals with at least three producers are reported to us.
Metal Bulletin tries to ensure both the buy and sell side of deals are reported to us and matched. However, the minimum threshold of 30,000 tonnes of transactions represent the total tonnage of deals reported to us and may include some duplicated business.
Metal Bulletin has also reclassified certain market participants involved in the talks, such as Panasonic and Sumitomo Chemicals, as trading houses rather than consumers because a large part of their trading activity is not for their own consumption but for third-party trading.
The main overseas producers involved in the quarterly negotiations are Rio Tinto, Alcoa, South32 and Rusal. Indian and Middle Eastern producers and their material are not considered during the settling of the quarterly benchmark.
Aluminium P1020 cif spot main Japanese ports (MJP) premium Metal Bulletin is increasing the frequency of publication of its assessment to twice weekly from weekly to more accurately track volatility in the spot premium, taking into account deals, bid, offers, deals reported second-hand and assessments.
This will strengthen our price offering in Japan and more accurately align the frequency of publication with the trading pace of the physical market. It will also bring the spot MJP pricing frequency in line with the publication dates of the Rotterdam duty-paid and US Midwest aluminium P1020 premiums.
Given the illiquid nature of the spot Japanese aluminium market, Metal Bulletin will assess the premium based on actual volume-weighted transactions but will also rely on other data points including bids and offers, deals heard and assessments. If no deals are reported, a change of trend needs to be confirmed data points for at least two days in a row. Out-of-range deals may also be discarded unless confirmed by other data points within two days. This will prevent unnecessary volatility in the premium curve.
Previously, assessments for the spot MJP aluminium premium were produced every Tuesday. From now on, the premium will be assessed on Tuesdays and Fridays, starting from Friday 23 March.
Metal Bulletin will also continue to price a spot low-high premium range but will no longer assess a single spot MJP number, since that number was not used by the physical market.
All historical data relating to this price prior to the amendment will remain available in the pricing section of the Metal Bulletin website and on FastMarkets.
If you require further information or would like to become a data submitter for these prices, please contact Shivani Singh by email at: pricing@metalbulletin.com. Please put ‘FAO: Shivani Singh, re: Aluminium P1020 cif MJP’ in the subject line.
To see all Metal Bulletin’s pricing methodology and specification documents go to https://www.metalbulletin.com/prices/pricing-methodology.html