GREEN AL: P1020A low-carbon differential at 0; Al VAPs command premium
Low-carbon primary aluminium is not yet commanding a premium in Europe but deals have been concluded with a low-carbon premium for aluminium billet and slab, participants told Fastmarkets.
Fastmarkets assessed its new aluminium low-carbon differential P1020A, Europe at zero on Friday March 5.
“For P1020A it is still pretty hard to command any extra differential for low-carbon units, we have tried but the market is still at parity,” a trader said.
One deal was reported for primary aluminium with a $5-per-tonne low-carbon differential included but this was for a long-term annual contract.
The majority of market participants told Fastmarkets that it was still very difficult to command any extra premium for P1020A at the moment because consumers are not yet willing to pay more for low-carbon primary aluminium.
“I think the P1020A low-carbon differential will stay at 0 for a while. There’s good demand in Europe for ingots and at the moment, people are paying up for units but not paying more for a lower carbon threshold,” a second trader said.
This comes at a time when European P1020A premiums are at multi-year highs.
Fastmarkets’ benchmark aluminium P1020A premium, in-whs dup Rotterdam was published at $135-140 per tonne on Friday, up from $130-140 per tonne the previous day. It is at its highest since May 2018 and up 22% since the start of 2021.
For aluminium value-added products, however, low-carbon units were securing a slight premium. Fastmarkets heard deals for slabs trading with a $12-per-tonne low-carbon differential while billet deals were reported with a $15 per tonne low-carbon differential.
Fastmarkets assessed aluminium low-carbon differential value-added product, Europe at a $5-15 per tonne premium on Friday.
“Aluminium billet offers the most trade frequency in this market and proves the transparency. We have signed some contracts with a low-carbon premium and I expect to see many more during the next negotiation season” a producer said.
European aluminium billet premiums are also at multi-year highs due to a lack of supply in the region, sources said.
Fastmarkets assessed the aluminium 6063 extrusion billet premium, ddp North Germany (Ruhr region) at $550-590 per tonne on Friday, up from $480-510 per tonne a week ago.
There is consistent steady downstream demand for aluminium billet, with deals already being concluded for the third quarter, trading sources said.
Although there are a number of different billet brands trading in Europe, some low-carbon aluminium billet is able to trade at a premium, participants told Fastmarkets.
Fastmarkets aims to bring transparency to the market with its new low-carbon aluminium differentials. Click here to read more about our pricing discovery and the evolution of low-carbon aluminium.
Inferred low-carbon aluminium midpoint calculations
- Aluminium P1020A premium, in-whs dup Rotterdam, inferred low-carbon midpoint was calculated at $137.50 per tonne.
- Aluminium P1020A premium, in-whs dp Rotterdam, inferred low-carbon midpoint was calculated at $167.50 per tonne.
- Aluminium 6063 extrusion billet premium, ddp Italy (Brescia region), inferred low-carbon midpoint was calculated at $560 per tonne.
- Aluminium 6063 extrusion billet premium, ddp North Germany (Ruhr region), inferred low-carbon midpoint was calculated at $580 per tonne.
An inferred number is a calculation using existing Fastmarkets numbers. The inferred prices take the midpoint of the underlying premium and add the midpoint of the relevant low-carbon aluminium differential.
To read the aluminium low-carbon differentials pricing methodology and specification documents, go to www.fastmarkets.com/about-us/methodology