The proposed differentials come after the completion of a two-month consultation and are the result of growing demand for price discovery for low-carbon aluminium in recent months. Market participants continue to expect the market for low-carbon aluminium to grow following green stimulus packages from global governments to spur economic development after Covid-19 lockdowns.
The proposed differentials are as follows:
Aluminium low-carbon differential P1020A , Europe, $/tonne
Carbon limit: 4tCO2e per tonne of aluminium produced, Scope 1 and 2 emissions
Quality: P1020A or 99.7% minimum Al purity (Si 0.10% max, Fe 0.20% max). Ingot
Quantity: Min 100 tonnes
Location: Europe
Unit: USD/tonne
Timing: Within two months
Publication: Quarterly, first Friday of the quarter. 4pm London
Aluminium low-carbon differential value added product, Europe, $/tonne
Carbon limit: 4tCO2e per tonne of aluminium produced, Scope 1 and 2 emissions
Type: Extrusion billet, primary foundry alloy, wire rod, slabs
Quantity: Min 100 tonnes
Location: Europe
Unit: USD/tonne
Timing: Within two months
Publication: Quarterly, first Friday of the quarter. 4pm London
Fastmarkets will define low-carbon aluminium originating from smelters that emit 4tCO2e per tonne of aluminium produced under Scope 1 and 2 emissions. Scope 1 and 2 includes direct carbon emissions from the smelter itself and indirect emissions from the power source of the smelter.
The differential will be assessed as an upcharge or discount on top of existing European P1020 and VAP premiums, $ per tonne and will be published on a quarterly basis.
The assessment will be expressed as a differential rather than a separate all-in premium to protect liquidity on existing Fastmarkets aluminium benchmarks, which are currently used as settlements for futures exchange contracts.
This differential could be used on top of Fastmarkets’ underlying European P1020 and VAP premiums including, but not limited to:
MB-AL-0346 Aluminium P1020A premium, in-whs dup Rotterdam, $/tonne
MB-AL-0004 Aluminium P1020A premium, in-whs dp Rotterdam, $/tonne
MB-AL-0316 Aluminium P1020A premium, fca dp Italy $/tonne
MB-AL-0319 Aluminium P1020A premium, fca dp Spain, $/tonne
MB-AL-0300 Aluminium 6063 extrusion billet premium, ddp Italy (Brescia region), $/tonne
MB-AL-0302 Aluminium 6063 extrusion billet premium, ddp North Germany (Ruhr region), $/tonne
MB-AL-0002 Aluminium 6063 extrusion billet premium, in-whs dp Rotterdam, $/tonne
MB-AL-0299 Aluminium 6063 extrusion billet premium, ddp Spain, $/tonne
MB-AL-0339 Aluminium primary foundry alloy silicon 7 ingot premium, ddp Germany, $/tonne
MB-AL-0340 Aluminium primary foundry alloy silicon 7 ingot premium, ddp Eastern Europe, $/tonne
The low-carbon VAP assessment could also be used as an upcharge for other aluminium products such as slab and wire rod, which Fastmarkets does not currently price.
The consultation on this proposal will run from December 1 until February 1, 2021.
To provide feedback on the proposal differentials above, please contact Alice Mason and Justin Yang by email at pricing@fastmarkets.com. Please add the subject heading ‘FAO: Alice Mason/Justin Yang, re: Green Aluminium.'
To see all Fastmarkets’ pricing methodology and specification documents go to https://www.fastmarkets.com/ about-us/methodology.
PRICING NOTICE: Proposal to launch European low-carbon aluminium differentials
Fastmarkets is proposing to launch low-carbon aluminium differentials to its existing European P1020 and value-added product (VAP) premium contracts in $ per tonne to meet market demand for a low-carbon aluminium pricing mechanism.